Top industry economists say the latest jobs report paints a solid picture of the labor market — but some “cracks” in the economy are emerging, which could make potential buyers and sellers more cautious.

But if interest rates continue to drop, “home sales will likely rise,” said Lawrence Yun, chief economist for the National Association of Realtors. “The influence of lower rates generally outweighs job losses.” 

The ideal situation, he said, would be one where employers add jobs while mortgage rates are decreasing — but “that scenario is more complex.”

What today’s job report said: The U.S. added 151,000 jobs in February, a bit shy of the 160,000 expected. The unemployment rate, meanwhile, came in at 4.1% instead of the 4% that had been forecast. Meanwhile, employers cut 172,000 jobs — the most since July 2020, when Covid-era cuts reached nearly 263,000.

“Temporary employment declined along with jobs in leisure and hospitality,” Yun said. “In other words, discretionary sectors, as opposed to necessity sectors, are facing challenges.”

What today’s jobs report really means: These numbers aren’t terrible, but a range of economists are leaning into synonyms for “caution” as they describe the situation.

Even though the economy appears solid on the surface, “we may be at the beginning of a weakening labor market,” said Lisa Sturtevant, Bright MLS chief economist. She cited the most recent Job Openings and Labor Turnover Survey (JOLTS) report, “which showed a slowdown in both job openings and quits, suggesting both employers and workers are becoming more cautious.”

Meanwhile, consumer confidence seems to be waning, “with consumers growing more anxious about overall economic conditions,” Sturtevant said.

Where do all those federal job cuts fit in? Government employment dropped by 10,000 last month, but Sturtevant said the latest report “does not fully reflect the impacts of the DOGE federal workforce cuts.”

The Bright MLS Greater D.C. Weekly Housing Market Tracker is not yet showing major shifts in the housing market in the metro area, where federal cuts will be most acutely felt. “Individuals and families experiencing layoffs will take some time to decide to make the hard decisions about if and when to move,” Sturtevant said. “With record levels of housing equity, most homeowners will not have to rush a decision.”

What’s next? The Federal Reserve will meet on March 19, and the jobs data — along with the latest Consumer Price Index (a measure of inflation, which has been rising) — will factor into its decision on interest rates. Like economists, the Fed has also emphasized “caution” as economic signals remain mixed.

Tariffs, meanwhile, are expected to push up prices, but not immediately — especially since they have, once again, been put on pause.