Jobs, Rates, and Oil: Factors Shaping the Housing Market Early in 2026

Entering 2026, expectations were that the housing market would largely mirror the dynamics of 2025. Early indicators suggest this dynamic is playing out, with similar levels of consumer confidence challenges and uncertainty coloring the early weeks of the spring selling season.

During Zonda’s recent New Home Market Update, chief economist Ali Wolf described the current market as “choppy.” While some markets are seeing solid traffic and interest from buyers, others are experiencing thin pipelines. 

Consumer confidence has been an underlying limited factor for the housing market dating back to 2025. Concerns about the overall economy and labor market have been top concerns for consumers. Additionally, consumers are now navigating a layered set of worries including geopolitical tensions, fluctuating oil prices, stock market volatility, and fears about inflation. 

“When people feel uncertain about the broader economy, they slow down big decisions,” Wolf said during the webinar. “Goepolitics, what’s happening with oil prices, [and] stock market volatility. A lot of things [right now] plant enough of a seed of doubt for consumers that continues to keep them on the sidelines.”

Oil prices have fluctuated in the past week due to the geopolitical tensions between the United States and Iran, surging about $100 per barrel earlier in the week. Wolf highlighted how oil prices are a factor to continue to watch as they could impact overall inflation and mortgage interest rates. After dipping below 6%, mortgage interest rates have ticked up to the low 6% range. 

“We need to watch oil prices. It’s good to see they are moving back down, [but] we are going to see how that plays out for the next couple weeks,” Wolf said. “The reason [mortgage interest] rates have gone back up is a renewed fear of inflation.”

Labor Market Concerns 

Wolf noted that employment conditions will be the single most important economic trend to watch through 2026. Reporting on labor market conditions has been mixed, with data from payroll processor ADP suggesting employment growth in February while government data from the U.S. Bureau of Labor Statistics suggesting employment contraction in the same period.

“Both [sources] are telling a consistent story, which is that the labor market in general is slower,” Wolf said.

For the housing market, distinguishing between cyclical and structural job losses are particularly important. Cyclical shutdowns occur when businesses right-size after a period of strong hiring or adjust staffing due to softer demand. Structural shifts could be more long lasting, however, and have a greater impact on the housing sector. With the rise of artificial intelligence, determining whether the slowing labor market is experiencing cyclical shifts due to an overall economic slowdown or structural shifts due to shifts in productivity will be of particular importance.

Wolf said the combination of labor market concerns, consumer confidence challenges, policy uncertainty, inflation concerns, and geopolitical concerns is contributing to a choppy market early in 2026. The extent to which these concerns continue will impact the strength of the market in the final nine months of the year. 

Insights in this article were taken from Zonda’s New Home Market Update webinar. Subscribers to Zonda’s National Outlook have access to the full webinar.