The first half of February delivered a wave of favorable economic data, painting a more optimistic picture for the start of the year than many analysts predicted. The combination of cooling costs and a resilient labor market provides a strong foundation for the housing sector as spring approaches.

Inflation inched closer to the Fed’s target of 2.0%. The Consumer Price Index (CPI) rose 2.4% year-over-year in January, the slowest pace since last May. Significant relief came from lower gasoline prices, a high-visibility win for consumer sentiment that provides immediate breathing room for household budgets.

The Core CPI, which excludes volatile food and energy prices, increased 2.5%, marking the lowest growth rate for this metric since April 2021. This suggests that the underlying inflationary pressures that have plagued the economy for years are finally stabilizing.

January’s labor market report outperformed expectations. Approximately 130,000 jobs were added in the month, and the 4.3% unemployment rate indicates a sturdy labor market. Paired with robust wage growth of 3.7%, renters and buyers alike are entering the year with stronger purchasing power than anticipated.

The strength of job creation has been overstated in recent years, but if last week’s report is accurate, it bodes well for an economy that had a lot of question marks heading into 2026.

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