👋👋 Good morning real estate watchers! Today, we are going to talk about how the Federal Reserve is basically twelve economists staring at the same spreadsheet like it’s a Rorschach test. One sees inflation. One sees resilience. One sees a soft landing. And one guy just sees “maybe we try vibes?”

But first, here’s what we’ve been paying attention to this week…

1️⃣ We Built Some Stuff: Housing starts limped through 2025 with a 0.6% overall decline and single-family construction down nearly 7%, as affordability kept buyers (and builders) on the sidelines. The one bright spot? Apartments and condos surged 17.4% for the year, because if you can't buy it, you might as well rent it. (NAHB)

2️⃣ Rates, But Briefly: Mortgage rates hit 6.01% this week (the lowest since September 2022) as softer inflation data and a friendlier jobs report pushed Treasury yields down and gave buyers a rare reason to smile. Just don't get too attached: Fed hawks are already circling, and this window has "limited time offer" written all over it. (Realtor.com)

3️⃣ Nobody Home, Nobody Panicking: Vacant homes held steady at 1.33% of all U.S. residential properties, while so-called "zombie foreclosures” (abandoned homes stuck in foreclosure purgatory) actually ticked down year-over-year to just 3.27% of foreclosure inventory. In a market starved for supply, the good news is that the housing apocalypse remains, for now, firmly cancelled. (ATTOM)

4️⃣ VC Loves Real Estate Again: Proptech companies pulled in roughly $1.7 billion globally in January alone, with the average deal size jumping to $34 million, as generative AI lit a fire under investor appetite. The deal count barely budged, meaning fewer bets are being placed, but the ones that are landing are considerably fatter. (CNBC)

5️⃣ Buyers Win, Barely: Home prices crept up just 1.1% year-over-year in January to $422,921, the softest stretch in years, as a flood of sellers chasing a trickle of buyers gave the few who showed up rare negotiating power. Homes sat for 66 days on average, the slowest January pace in a decade, which is either great news for buyers or a polite way of saying nobody's exactly rushing to the altar. (Redfin)

TOP STORY

Picture this: Twelve of the most powerful economists in the world sit in a room, stare at the same data, and somehow arrive at completely different conclusions about what to do next. One of them thinks rates should go down. Another thinks they should go up. At least two think they should go nowhere indefinitely. Nobody's fighting. Nobody's wrong, exactly. They just... disagree. Profoundly. About the single most important number in American real estate.

Welcome to the Federal Reserve in February 2026.

For the past year and a half, the real estate industry has been playing a waiting game with the Fed, hands folded, eyes on the clock, muttering under its breath like a passenger at a cancelled gate. The logic was simple: rates go down, mortgages get cheaper, buyers come back, the market thaws. The Fed cut three times in late 2024, dropping its benchmark rate to the 3.5%–3.75% range, and the industry exhaled. Finally, people whispered. The pivot.

But then.

Minutes released Wednesday from the Fed's January 27-28 meeting revealed something nobody wanted to see in the fine print: the committee is genuinely, meaningfully, somewhat dramatically split on where things go from here.

Some members believe cuts could resume, but only if inflation cooperates, and inflation has been performing like a houseguest who said they'd leave "soon" back in October. Others think the Fed should park rates at current levels indefinitely. And then there's the group that raised a hand (in an actual Federal Reserve meeting, with adults present) to suggest that raising rates might need to be on the table.

Rate hikes. In 2026. After the pivot party.

To be clear: this wasn't a majority position. But the fact that it was voiced, documented, and now sitting in the official record is the equivalent of someone at a BBQ casually suggesting you might want to put the burgers back in the fridge. The guests are already here. The grill is already hot. And yet.

Here's where the data gets genuinely uncomfortable for anyone hoping to list or buy this spring.

The Fed's preferred inflation measure (Personal Consumption Expenditures), has been hovering around 3%, a full percentage point above their 2% target. Meanwhile, futures markets are pricing in the next cut for June at the earliest, with a second possibly arriving in September or October, according to CME Group's FedWatch tool.

Translation for the real estate world: mortgage rate relief is not coming in Q1. It is almost certainly not coming in Q2. And the June projection isn't a promise, it's a hope dressed up as a calendar entry.

Meanwhile, the labor market is doing that thing it does, where it makes everyone nervous without actually collapsing. Private sector job creation is slowing. Almost all growth is coming from healthcare. Yet the unemployment rate somehow dropped to 4.3% in January, and payrolls beat expectations. The Fed is essentially trying to read the economic weather from instruments that are simultaneously reporting sunshine and a 40% chance of rain.

Here's the thing, people aren't quite saying out loud yet: the Fed's internal disagreement isn't just procedural. It's ideological. And it's about to get louder.

Jerome Powell's term as Fed Chair ends in May. Former Governor Kevin Warsh (rumored to be the next in line) has publicly favored lower rates, aligning him with Governors Waller and Miran, both of whom voted against holding rates steady in January, preferring another cut. On the other side, regional presidents Lorie Logan (Dallas) and Beth Hammack (Cleveland) have essentially declared inflation enemy number one and signaled they'd hold rates flat until further notice.

What you have is a central bank on the verge of a leadership transition, already divided, facing an inflationary environment further clouded by tariff uncertainty, and being asked to make clear, decisive policy decisions. If this were a real estate deal, both parties would be lawyering up.

The minutes' authors tried to paper over the disagreement with a careful rotation of vague quantifiers—"some participants," "a few," "many," "a vast majority"—a verbal shell game that technically says everything and commits to nothing. It's policy communication, written by someone who has clearly survived many meetings.

So what does this mean if you're in the real estate trenches?

For buyers who have been sitting on the sidelines waiting for rates to drop before jumping in: the window you're waiting for is real, but it's not this quarter. The math hasn't changed… waiting for a rate cut that may arrive in June, only to find inventory tighter and prices higher because everyone else was waiting too, is a gamble masquerading as a strategy.

For sellers hoping that lower rates would bring buyers back to the table at current prices: the cavalry isn't coming before summer, and even then, it's arriving in stages, not a flood.

For agents trying to explain any of this to clients: godspeed. May your analogies be simple and your patience be supernatural.

And for the market broadly: what the Fed minutes confirmed is that 2026 is not going to be the clean, linear "rates go down, market heats up" story the industry was quietly hoping for. It's going to be lumpy, contested, and (if you enjoy following central bank drama) genuinely fascinating.

The Fed doesn't know exactly what comes next. They said so themselves, just in considerably more syllables.

At least they're being honest about it. Unlike the inflation data.