Real Impact: What the March Jobs Report Means for Rental Housing

What Happened

According to the Bureau of Labor Statistics (BLS), the US economy added 228k jobs in March, healthily clearing the consensus forecast  (+140k jobs ) and above the 117k jobs added in February. The unemployment rate edged up 10 basis points (bps) to 4.2%, with health care and transportation/warehousing once again among the key sectors driving employment growth. Federal government jobs continued to shrink in March as large cuts to the Federal workforce that began in February continue to take shape. Federal government jobs declined by 4,000 in March following an 11,000 decline in February.

Impact on Interest Rates

Interest rate futures had a mostly muted reaction to the jobs data, with the previous week of market-moving economic news already preemptively shifting many forward-looking barometers. The consensus projection for the Federal Funds rate by the close of the May Fed meeting is now 62.7% of no-change following the data release, up slightly from a 60.8% probability of no change just before the release.

Year-end projections for the Federal Funds rate have shifted meaningfully in the past 24 hours, reflecting updates to the foreign trade outlook and this morning’s jobs data. As of Thursday (4/3) morning, there was a 78.7% probability that the Fed would cut rates no more than four (4) times in 2025. As of today (4/4), there is a slightly better than even probability (51.1%) that the Fed will cut rates at least five (5) times this year.

Notably, the stronger-than-expected payroll growth did not cause futures markets to revert to a more hawkish outlook for rate cuts for this year. The view that the Federal Reserve will conduct more than three cuts in 2025 has only begun to take hold in the past few days.

What it Means for Multifamily

Despite the better-than-expected topline results, the March jobs data will do little to subdue a relatively uncertain outlook for developers and buyers. If it holds, the projection of five (5) rate cuts by the end of the year would provide borrowers in the Multifamily and Commercial Real Estate sectors relief from the high cost burdens that have hampered momentum in recent years. Importantly, so long as long-term interest rates directionally follow, Fed rate cuts could open a window of opportunity for refinancings.

Currently, interest rate forecasts are sensitive to data that informs the economic outlook. However, in a moment where trade policies are shifting by the hour, market-moving updates are coming more often from White House than the BLS.