Investopedia Markets News (all except PF)

Bitcoin has rebounded after hitting a low of around $62,000 in February.
Credit: VCG /Getty Images

Key Takeaways

• Bitcoin hit its highest level in nearly a month on Wednesday, surging about 8% over the past 24 hours to as high as $74,000.
• President Trump slammed banks for stalling the passage of the Clarity Act, a measure that is expected to boost the crypto industry.
• Cathie Wood's ARK Invest recently added to its positions in crypto-linked stocks Coinbase and Robinhood, which also gained on Wednesday.

This crypto winter could be cut short.

Bitcoin (BTCUSD) rallied over the last 24 hours, pushing prices to as high as $74,000 for the first time since early February—signs of an early thaw that appear to be giving investors hope that a recovery is underway. Altcoins, including ether (ETHUSD) and sol (SOLUSD), also rose, helping drive the overall crypto market back to $2.5 trillion in market capitalization, according to data compiled by Messari.

The surge in crypto prices coincided with President Donald Trump throwing his support behind a key crypto bill called the Clarity Act—the passing of which crypto experts have said was the sole, near-term catalyst that could pull the coin market out of its months-long rut. Meanwhile, a major investor, Cathie Wood's ARK Invest, recently picked up more shares of Coinbase (COIN) and Robinhood (HOOD), crypto-linked stocks that are also gaining on Wednesday.

"The Banks should not be trying to undercut The Genius Act, or hold the Clarity Act hostage. They need to make a good deal with the Crypto Industry because that's what's in the best interest of the American People," Trump said.

WHY THIS MATTERS TO YOU

The disagreement between banks and the crypto industry is, in a nutshell, over yield. Crypto companies pay rewards on stablecoins, which aim to stay pegged to fiat like the U.S. dollar—activity that banks argue would compete with deposit accounts.

The Clarity Act, which would establish a general framework to evaluate whether cryptocurrencies were securities or commodities, stalled in the Senate in January amid a standoff between the industry and big banks over stablecoin rewards. Trump's missive, posted to Truth Social Tuesday evening, would appear to have renewed optimism that the bill would pass.

If it does, and stablecoin rewards are allowed, crypto platforms including Coinbase, and ventures like the Trump family-backed World Liberty Financial, which has its own dollar-pegged stablecoin USD1, stand to benefit.

That crypto prices held relatively steady in spite of geopolitical tensions driving volatility in risk-assets earlier this week bodes well for the coin market.

However, elevated macroeconomic risks—widening credit spreads, and stress in private credit markets—remain headwinds, according to Sean Farrell, Fundstrat's head of digital asset strategy.

"This is likely a rally to rent rather than own," he said, in a note yesterday.

Friday’s jobs report will reveal whether January’s strong hiring momentum continued into February.
Credit: Jonathan Johnson / Bloomberg via Getty Images

Key Takeaways

• A report coming Friday will likely show the U.S. economy added 50,000 jobs in February, according to the median forecast.
• A report in line with these expectations would reflect a slowdown from the unexpectedly high job growth in January, which was mainly driven by health care.
• The labor market slowed sharply last year as tariffs, the immigration crackdown, and artificial intelligence all took a toll on job creation.

The labor market likely maintained its recent pattern in February, with modest job growth alongside a low unemployment rate, in what economists have described as a “low-hire, low-fire” trend.

Friday's report on the job market from the Bureau of Labor Statistics is likely to show U.S. employers added 50,000 jobs in February, a decline from the unexpectedly high 130,000 added in January, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The unemployment rate is expected to stay at 4.3%, the lowest level since August.

The data will indicate whether the job market is recovering from its slump last year, which was the slowest year for job creation since 2003 outside of a recession. Uncertainty about trade policy due to President Donald Trump's unpredictable tariff campaign, the reduction in the number of foreign-born workers because of the immigration crackdown, and the introduction of AI all weighed on job creation last year, according to economists.

What This Means For The Economy

Job creation and the unemployment rate are two of the most widely-watched indicators of the health of the economy and could signal whether the U.S. is headed for more turbulence.

Forecasts vary wildly from economist to economist.

Some forecasters expect job creation to slow further than the median, since the January uptick was almost entirely due to an unlikely-to-be-repeated surge in the health care and education sectors. Economists at Deutsche Bank, for example, forecast growth of only 30,000 jobs.

If job growth comes in hotter than expected, that would suggest January's jump in jobs was a genuine sign of improvement rather than just a fluke. Economists at Nomura forecast 85,000 jobs were added in February.

"In our view, the labor market remains resilient," David Sief, chief economist at Nomura, wrote in a commentary. "Signs of stress from late last year appear to be easing, and employment growth is gradually gaining momentum."

Officials at the Federal Reserve have said they will seriously consider job market data as they decide whether to further reduce interest rates in the coming months. Policymakers at the central bank have been divided over whether to lower borrowing costs to reverse last year's job slowdown and prevent a surge in unemployment, or to keep rates higher for longer to stamp out high inflation.

"We think job growth sharply decelerated in February, but the slowdown won't change our assumption that labor market conditions have at least stabilized, allowing the Federal Reserve to hold policy steady as it assesses the economic impact of the Iran conflict," wrote Oxford Economics' Lead Economist Nancy Vanden Houten.

Update, March 5. 2026: This article has been updated to include a quote from Oxford Economics. It was originally published March 4, 2026.

Even with Wednesday's gains, Tesla shares have lost nearly one-fifth of their value since hitting an all-time high in December.
Credit: Costfoto / NurPhoto / Getty Images

Key Takeaways

• Tesla shares climbed Wednesday as the electric vehicle maker's stock got an upgrade from Bank of America. 
• The bank's $460 price target would suggest 14% upside from the stock's recent levels.

Tesla just won a fresh vote of confidence from Bank of America.

Shares of Tesla (TSLA) were recently up more than 3% at around $405, as the bank reinstated its coverage of the electric vehicle maker with a "buy" rating Wednesday.

The analysts told clients they view Tesla as "the current leader in consumer autonomy," pointing to its advances in autonomous driving and robotics as reasons for the upgrade, along with expectations that Tesla could gain share in a tougher regulatory environment for electric vehicles.

Why This Matters to Investors

The upgrade could help boost confidence in shares of Tesla, which have taken a hit in recent weeks amid worries about growing competition, sliding sales of its EVs, and weak sentiment around some AI-exposed stocks.

"We expect TSLA to quickly become a leader in robotaxi services, given its ability to scale more profitably than competitors," Bank of America wrote. The analysts added they also see further upside from growing adoption of the company's full-self driving software, Optimus humanoid robots and energy storage business.

Based on its "sum-of-the parts" analysis, BofA issued a $460 price target, suggesting roughly 14% upside from Tesla's recent levels. That's a bit higher than the $445 consensus target for the stock, which remains a divisive one on Wall Street. Just slightly more than half of the analysts with current ratings tracked by Visible Alpha recommend buying the shares.

Even with Wednesday's gains, Tesla shares have lost nearly one-fifth of their value since hitting a record high in December.

Robinhood CEO Vlad Tenev (pictured) will unveil new products at a keynote event Wednesday evening.
Credit: Suhaimi Abdullah / Bloomberg via Getty Images

Key Takeaways

• Shares of Robinhood soared on Wednesday ahead of a product launch event that could see the brokerage expand its offerings in pursuit of its goal of becoming "a financial super app."
• Shares have been pressured this year by slumping cryptocurrency prices, which played a major role in the exchange's disappointing earnings report last month.

Robinhood is launching new products from New York City’s JFK Airport this evening. Its stock is already airborne. 

Shares of Robinhood (HOOD) were up about 8% Wednesday afternoon ahead of its “Robinhood Presents: Take Flight” event, where the digital brokerage expects to “introduce a new wave of products designed to help customers build, grow, and plan wealth across every stage of life.”  

The event will begin at 7:30 p.m. ET at the TWA Hotel at John F. Kennedy Airport. A livestream will be available on the Robinhood app, the company’s X account, and YouTube.

Why This Is Important

CEO Vlad Tenev has laid out his vision for Robinhood to be a one-stop-shop for financial products and services. The company is set to unveil an assortment of new products on Wednesday evening.

Over the past several years, Robinhood has rolled out a slew of products and services in an effort to become “a financial super app” that acts as a user's one-stop-shop for financial services. It launched its Robinhood Gold credit card in early 2024, and later that year rolled out crypto staking, index options and prediction markets. Last year brought forays into wealth management and tokenized assets. This year, the company is hoping to bring private investments to public markets. 

Despite Wednesday’s gains, Robinhood stock has shed more than a quarter of its value this year. The stock plummeted early last month after the company’s quarterly results fell short of estimates amid a slump in cryptocurrency prices. The correction in crypto markets had already weighed heavily on the stock in the weeks leading up to February’s report. 

Nonetheless, Wall Street is optimistic about the stock ahead of Wednesday’s event. Cathie Wood’s ARK Investment Management bought nearly 160,000 shares across three separate funds yesterday. Eight of the nine analysts with a current rating tracked by Visible Alpha call Robinhood stock a "buy," with the lone standout assigning it a neutral "hold" rating. Their average price target of $117.60 is more than 40% above the stock's intraday price on Wednesday.

Contracts tied to the likelihood that Iranian Supreme Leader Ali Khamenei (depicted here on a billboard in Tehran) would be ousted are at the center of a controversy.
Credit: Majid Saeedi / Getty Images

Key Takeaways

• Kalshi this week said it voided an event contract linked to the removal from power of Iran's Supreme Leader Ali Khamenei's, in order to comply with CFTC regulations.
• Polymarket's international platform, which isn't subject to CFTC rules, paid out on a similar contract, meaning some people profited from Khamenei's death.
• The confusion underscores how complicated some event contracts can be to settle.

Any bet goes on prediction markets, but death complicates the trade.

Folks who placed bets linked to the fate of Iran Supreme Leader Ali Khamenei, and were set to profit handsomely, were caught off guard when the trade didn't immediately settle following the weekend strikes on the country, and its leader's subsequent death. Prediction market operator Kalshi effectively voided the contract.

Kalshi CEO Tarek Mansour took to social media to address those "frustrated about the Khamenei market," explaining that the Commodity Futures Trading Commission disallows folks from directly profiting on "war, assassination, terrorism, or other violent outcomes."

On rival Polymarket's international venue—where the CFTC's rules don't apply—bettors had to wait for a similar contract to be resolved amid user disputes about when exactly the Iranian leader was declared "out." Polymarket eventually settled the trade to the affirmative. One winning bettor would appear to have made over $123,000 on the "Khamenei out" contract.

Event contracts linked to geopolitical events, as popular as they are with regular folks and institutions alike, are generating fresh drama. Earlier this year, someone profited handsomely from an unlikely bet on the removal of Nicolás Maduro as Venezuela's president, raising questions on whether insiders were using misappropriated information for personal gain. Now, issues stemming from event contracts linked to recent current events show how complicated they can be to settle.

WHY THIS MATTERS TO YOU

Prediction markets have become a popular venue for regular folks to trade on everything from U.S. elections and company earnings to sporting events and geopolitical tensions. Their popularity is now drawing undesirable attention, with some lawmakers keen on policing them for things like insider trading and profiting on violence.

"As an exchange, we resolve the market according to the rules, even when there is disagreement with the resolution," Mansour wrote on X, adding that the platform would reimburse fees, that contracts would be settled to the last traded price before the announcement of Khamenei's death, and that it would "improve" by changing how similar contracts were presented so that traders better understand the terms.

Mansour's missive drew a range of responses: Some posted screenshots of their losses, while others observed that there are users who don't "care to read" the rules, "then cry about it." Some responded in anger at the voiding of the contract, with one arguing that "the title and description of the market would lead any reasonable person to believe that death counted."

Senator Chris Murphy (D-Ct.), on social media, vowed to introduce legislation "ASAP" to "ban" such event contracts in response to another tweet that suggested a group of insiders were poised to collectively make a $1.2 million profit betting on the Iran strikes.

Murphy's reaction follows on the heels of a letter six other democratic senators sent to the CFTC last week expressing concern about contracts "that incentivize physical injury or death, and the grave and perverse moral and geopolitical implications" of them and asked the regulator to clarify that those were not allowed.

Meanwhile, contracts related to Iran—who the next leader will be, whether the Iranian regime will fall, when the country will close the Strait of Hormuz, and whether other countries including France, the United Kingdom, or Germany would strike Iran by the end of the month—continue to trend.

News of the day for March 4, 2026

Stocks finished lower on Tuesday though well above their early-session lows, as the market endured massive price moves for the second straight day.
Credit: Michael M. Santiago / Getty Images

Stock futures are slightly higher this morning after two days of volatile trading, as investors assess the potential impact of the conflict in the Middle East; U.S. officials said Iran’s fighting capacity has been diminished while Saudi Arabia said a strike on an oil processing plant caused little damage; oil prices have stabilized after President Donald Trump said that the U.S. would protect oil shipping; bitcoin is surging, lifting crypto stocks along with it; and chip giant Broadcom is set to report earnings after the closing bell. Here's what you need to know today.

Stock Futures Rise as Traders Monitor War

Stock futures are ticking higher after a wild few days of trading, as investors keep close tabs on developments in the Middle East. Futures tied to the Dow Jones Industrial Average were up 0.2% recently, while those linked to the S&P 500 and the tech-heavy Nasdaq added 0.3% and 0.5%, respectively. Major indexes closed lower yesterday but well above their intraday lows, as the market rebounded from steep early losses for the second day in a row. At one point Tuesday, the Dow had shed nearly 1,300 points—on track for its worst day since last April's tariff shock—but the blue chip index ended the day down 400 points.

Oil prices stabilized after two days of big gains that were fueled by concerns about supply disruptions, while bitcoin surged. (more on those markets below.) Gold futures were up 1.2% recently at $5,185 an ounce, recovering from a decline yesterday that came on the heels of a big gain on Monday. The yield on the 10-year Treasury note, which can influence mortgage rates and other consumer loans, was at 4.08%, up from 4.06% at yesterday's close.

Iran Conflict Enters 5th Day

The conflict in the Middle East moved into its fifth day on Wednesday as U.S. military leaders said that Iran’s ability to launch attacks was declining. U.S. Admiral Brad Cooper, head of U.S. Central Command, said that the U.S. has  “severely degraded Iran’s air defenses and destroyed hundreds of Iran’s ballistic missiles, launchers and drones,” according to a Wall Street Journal report. CNN reported that Trump said that Iran’s navy and air force have been “knocked out.” Israel said it has launched another wave of strikes in Iran while also targeting locations in Lebanon. The Saudi Arabia Defense Ministry said an Iranian strike on a Saudi Aramco oil facility caused minor damage that forced a temporary halt in operations, The Journal reported.

Oil Stabilizes After Trump Promises Tanker Protection

Oil prices were little changed after rising sharply the past two days, as President Trump promised to provide insurance and possible Navy protection for oil tankers threatened by Iran. West Texas Intermediate futures, the U.S. crude oil benchmark, were recently down 0.5% at around $74 per barrel, after rising 11% over the past two sessions to its highest level since June. Brent crude futures, the international benchmark, were holding steady at around $81.50 per barrel, after gaining 12% the past two days. Goldman Sachs lifted its forecast for oil prices by $10, with the bank now projecting that Brent crude will average $76 a barrel over the second quarter, up from the prior projection of $66 a barrel. Investors are concerned that a sustained rise in oil prices could spark inflation and weigh on economic activity.

Bitcoin Rises Above $70,000, Lifting Crypto Stocks

Bitcoin surged overnight to eclipse the $70,000 threshold for the first time since mid-February. Bitcoin traded at around $71,300 recently, up from a low yesterday around $66,300. The rising bitcoin price helped lift stocks tied to cryptocurrencies. Shares of major bitcoin buyer Strategy (MSTR) and crypto exchange Coinbase (COIN) were each up about 7% in recent premarket trading, while bitcoin miners MARA Holdings (MARA) and Riot Platforms (RIOT) added 6% and 4%, respectively.

Broadcom Set to Report Earnings Today

Investors will be keeping a close eye on Broadcom (AVGO) results, due after the closing bell, for the latest indication of the state of the AI business. The chipmaker is expected to report adjusted earnings per share of $2.02 on a nearly 29% year-over-year jump in revenue to a record $19.21 billion for its fiscal first quarter, according to estimates compiled by Visible Alpha. Broadcom stock has lost nearly one-quarter of its value from its December high, amid concerns about growing competition, pressures from rising memory prices, and skepticism around the sustainability of AI-driven growth. However, Wall Street analysts have remained bullish on Broadcom, setting a mean target price of around $454. The stock was up about 1% ahead of the opening bell at around $317.

Shares of Broadcom have lost nearly one-quarter of their value from their December highs
Credit: Thomas Fuller / SOPA Images / LightRocket / Getty Images

Key Takeaways

• Broadcom is set to report earnings after the closing bell Wednesday, with Wall Street analysts projecting record results on surging AI demand.
• Options pricing suggests traders expect Broadcom's stock could move close to 8% in either direction in the days after its results.

Broadcom is due to report earnings after the closing bell Wednesday. Traders anticipate the event could lead to a big swing in the chipmaker's stock.

Options pricing suggests traders see Broadcom (AVGO) stock moving nearly 8% in either direction by the end of the week. A shift of that size from Tuesday's close could lift shares back to around $339, recovering some of their recent losses, or pull them down to $289.

Shares of Broadcom have lost nearly one-quarter of their value from their December highs, amid concerns about growing competition, margin pressures from rising memory prices, and some skepticism around the sustainability of AI-driven growth. Many of its rivals, including Nvidia (NVDA) and Advanced Micro Devices (AMD), have also been pressured in recent weeks.

Why This Is Significant

Broadcom, like AI chip leader Nvidia, could be hard pressed to turn around weak sentiment with its results this week. Shares of Nvidia have lost ground in the wake of the company's earnings last week, despite a blockbuster report.

Earlier this month, Bank of America analysts said they expect Broadcom to top consensus estimates, as major clients such as Google parent Alphabet (GOOGL) dramatically boost spending on AI infrastructure.

Jefferies analysts warned they see likely parallels with Nvidia's recent performance, however. "We expect a significant beat & raise but this may not be enough to get things moving in the right direction," they wrote.

Broadcom is seen reporting adjusted earnings per share of $2.02 on a nearly 29% year-over-year jump in revenue to a record $19.21 billion in its fiscal first quarter, according to estimates compiled by Visible Alpha.

Wall Street analysts are overwhelmingly bullish on Broadcom's stock. Of the 12 analysts with current ratings compiled by Visible Alpha, 11 have issued "buy" recommendations, compared to just one neutral rating. Their mean target around $454 would suggest they see the stock making a full recovery to new highs in the next 12 months.

Traders work on the floor of the New York Stock Exchange during afternoon trading on March 03, 2026 in New York City.
Credit: Michael M. Santiago / Getty Images

KEY TAKEAWAYS

• Rising oil prices due to the U.S.-Iran conflict could increase inflation and pressure bond markets.
• The 10-year U.S. Treasury yield has climbed to 4.06%, reversing last week’s decline below 4%.
• Investors remain cautious but are treating current oil disruptions as temporary, limiting market movement.

The bond market stands to take more hits from the escalating U.S.-Iran conflict, as some investors worry a surge in oil and gas prices could rekindle inflation.

Energy prices haven’t spiked to worrying levels yet, but analysts see risks that oil prices will surpass the more than 10% rise already seen since the U.S. and Israeli air strikes in Iran. If higher prices persist, the bond market, which stayed relatively stable Tuesday after a volatile start to the week, could face renewed pressure.

The yield on the benchmark 10-year U.S. Treasury, a key input into mortgage rates, is now up to about 4.06% and at risk of rising higher, analysts say.

“The longer the war continues, the greater the risk of further increases in energy prices, which could keep upward pressure on Treasury rates,” wrote John Canavan, lead analyst at Oxford Economics.

The upside risks mark a shift from last week, when the 10-year yield had dropped below 4%. The decline had pushed mortgage rates down below 6% for the first time since September 2022, making homebuying cheaper.

Why This Matters

Treasury yields influence borrowing costs across the economy, from mortgages to business loans. If oil-driven inflation pushes yields higher, consumers and investors could face tighter financial conditions.

But now investors are debating whether bonds may get hit again. The big risk is a spike similar to that in 2022, when Russia’s invasion of Ukraine led to a surge in energy prices—supercharging the overall rise in inflation after the COVID-19 pandemic.

Iran’s threats to attack tankers have effectively stopped traffic in the Strait of Hormuz, where about a fifth of oil and liquefied natural gas travels. Iran has also attacked refineries and plants in the Middle East, prompting Qatar to halt its massive output of liquified natural gas.

Oil stockpiles in the United States, China and oil-producing giants may provide a buffer, but they will “only help tame the magnitude of the price increase,” wrote Roukaya Ibrahim, chief commodity strategist at BCA Research.

“Investors should not dismiss the risk of meaningful energy market disruptions,” Ibrahim wrote.

Safe Haven Status

Markets don’t seem overly alarmed at the moment. The price of Brent crude oil remains around $80 a barrel, far below the levels of $120 or more in 2022.

“In the event that the march higher in crude prices extends to the $90-$100 range, then the macro narrative would quickly change, especially if prices remain in that zone for months,” wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

For now, however, investors seem willing to treat the oil disruptions as temporary—especially given President Donald Trump’s focus on a resumption of traffic through the Strait of Hormuz.

The initial wave of bond-selling “appears to have run its course,” wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, potentially stabilizing bond yields after their initial rise.

Treasuries may even benefit from investors’ tendency to sell riskier stocks and buy bonds during periods of uncertainty, Lyngen wrote. The connection between bonds and stocks isn’t perfect. The two sold off together in 2020 and during last April’s tariff turmoil, as investors dumped assets en masse.

Bonds’ safe-haven quality wasn’t visible on Monday, since stock markets remarkably ended in the green on the first day of trading following the weekend’s airstrikes. But stocks fell on Tuesday, prompting some investors to buy bonds despite the risk of inflation.

Tuesday’s trading suggests that “safe haven demand for Treasuries remains when geopolitical discord emerges,” he wrote. 

But markets haven’t faced a real test yet, wrote Henry Allen, a macro strategist at Deutsche Bank, since the increase in oil prices has been small compared to 2022, the Gulf War or oil shocks in the 1970s.

“We are yet to see an increase in oil prices above +50%, let alone one that is sustained,” Allen wrote, limiting the potential for a sell-off in stocks or a massive repricing of the Fed’s policy outlook.

Fed Outlook

A “sharp, hawkish pivot” from the Fed forced a big sell-off in stocks in 2022, Allen wrote, as the Fed sought to rein in inflation by sharply raising interest rates. 

But market expectations for the Fed haven’t moved much, even as some anticipate a small delay in Fed cuts. Much like they did last week, investors still generally believe the Fed will lower rates twice this year, according to the CME Group’s FedWatch tool, which uses futures markets pricing to determine Fed probabilities.

That’s because many investors anticipate a temporary hit to inflation at the moment, wrote Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. The conflict “has modest implications for the US economic outlook, for now,” he wrote, pushing up inflation only slightly.

Fed officials said on Tuesday they’re watching the issue closely.

It is “too soon to know” whether the Iran conflict will have a lasting imprint on inflation or will be more temporary, Minneapolis Fed President Neel Kashkari said at an event on Tuesday.

“The question I think that we are wrestling with, and markets are wrestling with, is: How long is this going to last? How bad is it going to get? Is it going to look more like Russia-Ukraine, or is it going to look more like Hamas attacking Israel?” Kashkari said. “That's going to have effects on monetary policy."

The shortage of housing inventory exceeded 4 million in 2025, as builders continue to lag homebuyer demand.
Credit: Justin Sullivan / Getty Images

Key Takeaways

• The shortage of housing inventory got worse in 2025, according to Realtor.com, which found that the market needs 4 million more homes to meet buyer demand.
• Limited housing inventory is a key driver of elevated home prices.
• The housing shortfall was the worst in the South, while the Northeast showed improvement despite having the most acute shortage over the past decade.

Finding a house to buy isn’t getting any easier. 

The shortage of housing inventory got worse in 2025, according to Realtor.com, which found that the market needs 4 million more homes to meet buyer demand.

The inventory gap edged higher because the 1.36 million housing construction starts in 2025 fell 50,000 short of the number of households formed during the year. That extended an inventory shortfall that has persisted for a decade. 

Why This Matters to You

A persistent lack of supply keeps home prices elevated, fueling overall inflation and complicating the Federal Reserve’s path on interest rates. High housing costs also crowd out other consumer spending, limiting discretionary purchases and weighing on the broader economy.

“Even when annual construction and household formation are roughly balanced, the market is still digging out from more than a decade of underbuilding,” said Danielle Hale, chief economist at Realtor.com, in a prepared statement. “Without a sustained and targeted increase in housing supply, particularly in areas with strong job growth and persistent demand, affordability challenges will continue to sideline many would-be buyers.”

Severe Inventory Shortage in the South

The shortage of homes for sale is one of the main causes behind the affordability crunch in the housing market. With a limited number of homes to choose from, buyers have fewer options, while sellers are able to keep their listing prices higher.

The National Association of Realtors (NAR) has also reported a shortage of homes for sale, which has driven the median existing-home sales price up to $396,800.

"Due to low supply, the median home price reached a new high for the month of January,” said NAR Chief Economist Lawrence Yun in a statement. 

Last year’s housing inventory deficit is the third-largest since 2012, extending a trend that began when builders shied away from new home construction in the wake of the 2008 housing crisis.

The housing shortage last year was most severe in the South, where an additional 1.62 million homes are needed to meet demand, the Realtor.com report noted. But while the deficit was greatest in the South, the report noted that the Northeast has been struggling with a housing shortage for the longest, even as it was the only region to show improvement in 2025.

Construction Levels Decline

Realtor.com reported that builders completed around 1.5 million homes in 2025, down from 2024 levels but still above the historical average. Still, the pace of building wasn’t fast enough to make up the deficit, as the report found that it would take approximately seven years to close the inventory gap. 

“While construction levels remain elevated compared with historical norms, they are not yet high enough, or targeted enough, to meaningfully close the gap,” said Hannah Jones, senior economic research analyst at Realtor.com.

The report also examined the pent-up demand among 18- to 44-year-olds and noted that 1.8 million households failed to form last year due to affordability issues. Realtor.com calculated these levels by looking at household formation ratios from the five-year period preceding the current housing shortfall. 

“Rather than establishing independent households, many young adults have remained with parents, lived with extended family, or shared housing with roommates,” the report noted.

Additionally, the median income needed to afford a home improved to $86,000 in 2025, but it was still above the earnings of many young people, Realtor.com found.

Federal Reserve Bank of Minneapolis President Neel Kashkari gave insight Tuesday into how the war with Iran could affect the Fed's decisions.
Credit: Michael Nagle / Bloomberg via Getty Images

Key Takeaways

• The U.S. attack on Iran has pushed up energy prices and could deal a setback to the Federal Reserve's battle against inflation.
• Fed officials said the war's effects would depend on how long it lasted.
• A prolonged war could derail expectations for Fed rate cuts later this year.

The U.S. attack on Iran has complicated the Federal Reserve's already challenging task of managing inflation and maintaining high employment.

Officials at the Fed are in the same boat as other forecasters: waiting to see how the outbreak of violence in the Middle East plays out, how long it lasts, and how severely it disrupts the U.S. economy.

The war has already caused energy prices to rise significantly, with WTI Crude up 8% since the conflict began as of Tuesday afternoon, and a gallon of regular gasoline up 10 cents to $3.11 per gallon, according to AAA.

The spike in energy prices has immediate implications for the Fed's efforts to push inflation down to a 2% annual rate, especially if the war spreads or drags on for a long time. The war has disrupted oil exports from the Middle East, with more severe effects on U.S. energy prices the longer the conflict continues. On Wednesday, two Fed officials said they were watching the situation.

What This Means For The Economy

Whether the Fed reacts to a war-related spike in energy prices could have a serious impact on borrowing costs and economic growth.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said the war could have little impact on inflation, as in the Israel-Hamas conflict in 2023, or a more severe impact, as in the Russian invasion of Ukraine in 2022.

"That's going to have effects on monetary policy," Kashkari said, speaking at a Bloomberg event. "I don't think anybody thinks when Russia invaded Ukraine and the inflation that resulted that the Fed should have just ignored that... It's just too soon to know what imprint this has on inflation and for how long."

John C. Williams, president of the New York Fed, said the effect on financial markets was "reasonably muted," speaking at a separate event Tuesday. Williams did not address the war in prepared remarks, but spoke with reporters afterwards.

“We’ll have to see how persistent this is,” Williams said of the war's effects on inflation, Bloomberg reported.

The war's fresh uncertainty comes at a time when Fed officials are divided over whether inflation or labor-market weakness poses the greatest threat to the central bank's dual mandate.

Prices rose 3% over the year, according to the Fed's preferred consumer price measure, remaining consistently above the 2% target since 2021. Meanwhile, the job market is avoiding mass layoffs but adding a few jobs outside of health care.

"Inflation has been above the Fed’s objective for nearly five years now. I don’t think we have room to be complacent," Jeffrey Schmid, president of the Kansas City Fed said at an event in Denver.

Schmid did not address the possible impact of the Iran war in his prepared remarks.

Williams, on the other hand, was more optimistic despite noting that tariffs have been pushing up consumer prices, keeping inflation stubbornly high.

"I anticipate inflation to start coming back down later this year when the peak effect of tariffs on the inflation rate is behind us," he said, according to prepared remarks.

The Fed is widely predicted to resume cutting interest rates later in the year as inflation subsides, but the war could derail those expectations.

On Tuesday, traders dialed back their bets on Fed rate cuts: there was a 56% chance the Fed would keep rates on hold through June, up from 50% a week ago, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.