Real Impact: What the September 2026 Jobs Report Means for Rental Housing

What Happened: The US economy added 29,000 jobs in September, well below forecasts of 84,000-100,000 and significantly below August’s downwardly revised total of 133,000.

The unemployment rate ticked up to 4.2%, though the increase was partly driven by an uptick in labor force participation, which rose 0.2 percentage points to 61.8%. Meanwhile, the BLS' broader U-6 measure of underemployment, which includes discouraged workers and those working part time for economic reasons, edged down to 7.6%, its lowest level since January 2025.

Employment changes across major sectors were modest in both directions. Health care continued its upward trend, adding 17,000 jobs but at a slower pace than its 12-month average of 33,000. Construction was little changed at 11,000, and manufacturing added 9,000, extending a gradual recovery that has added 72,000 jobs since a low in December 2025.

Meanwhile, government shed (-)17,000 positions and financial activities lost (-)7,000, with the latter now down (-)129,000 from a May 2025 peak, with most of the cumulative loss concentrated in insurance carriers and related activities.

Revisions to prior months compounded the headline labor market weakness. August's gain was revised down 29,000, from 162,000 to 133,000, and July's revised figure was cut a further 31,000, moving from a (+)21,000 gain in employment to a (-)10,000 loss. Combined, employment over the previous two months is 60,000 lower than previously reported. The 12-month average monthly gain now stands at 45,000.

Average hourly earnings edged up 5 cents, or 0.1%, to $37.81 in September, up 3.0% over the past year.

What It Means for Interest Rates: The September jobs report lands three weeks after the Federal Reserve delivered its first rate hike in three years. The FOMC’s most recent Summary of Economic Projections (SEP), released alongside the September decision, shows that on average, members expect at least one 25 basis point hike before the year's end.

Heading into the morning of the employment report, futures markets had priced a 24.4% probability of a rate increase at the October 28th FOMC meeting, per CME FedWatch. That probability had fallen from a high of 72.5% about a week earlier, after soft PCE inflation data and more cautious Fed commentary pulled it lower.

September's bleak 29,000 print, along with steep revisions to the summer months and decelerating wage growth, should, on balance, lower the likelihood of an October hike. Following the release, the probability of a rate hike in October fell 3.9 percentage points to 20.5%, a modest tick down, but reflective of the job report's likely impact on policymakers' positions.

The 10-year Treasury yield initially dropped to around 5.175%, extending a retreat from this week's peak above 5.34%, the highest level since 2002, as markets repriced the near-term hike path. However, it has since reversed back to 5.270%, roughly 4 basis points over yesterday's close. Oil prices also fell, with Brent slipping below $100 a barrel and WTI near $88.60, adding a disinflationary tailwind to the rate repricing.

Futures markets continue to price in about an 85% probability of at least one more hike before year-end, which, despite the weak jobs data, is up about 5% from yesterday. Still, given October's forecast, this implies either job growth improves or PCE inflation regains momentum in October and November, both of which remain a toss-up. September's weak payroll and wage data soften the urgency for tightening, but the Fed hiked into an already slowing labor market, and Fed Chair Warsh recently framed the committee's mandate as focused on price stability first.

Between today and the December 9th FOMC decision, the committee will see two more CPI prints, two more jobs reports, two more PCE readings, the Q3 GDP advance estimate, and its own October 28th meeting. This full data calendar leaves the December outcome genuinely open.

What It Means for Rental Housing: The downward revisions to July and August totals suggest the summer labor market was 60,000 jobs weaker than initially believed. Leasing demand and rent growth expectations developed in the past two months were therefore calibrated to a labor market modestly stronger than it actually is. Still, several underlying rental housing fundamentals continue to trend positively.

Annual rent growth in Multifamily units has now accelerated for five consecutive months, while 74.6% of US metros recorded month-over-month rent gains in August, the highest share since March 2023. While the financing environment for rental housing continues to present challenges, operating performance has continued to strengthen amid the uncertainty. Chandan Economics/RentRedi small-landlord rent collections data through September showed that on-time payments held at 83.2%, matching August's level. More notably, rent performance continues to strengthen year over year, up 91 basis points from September last year, its strongest annual pace since May 2023.

Many of these measured improvements predate the September rate hike, and if inflation remains elevated in the short term—especially from non-core components like energy, which are largely out of the Fed's control—rising rates may become more displacing for income-constrained renters.

While the 10-year Treasury yield’s pullback from its 24-year high offers directional relief, the rate environment remains at its most restrictive since the onset of the post-pandemic tightening cycle. September's lackluster numbers don't meaningfully alter the rate outlook, but they reduce the urgency of the next hike, maintaining some breathing room for rate-sensitive cash flows.