Will job growth and lower rates be enough to motivate buyers? 

The future of the economy may be unclear, but the job market is still going strong, according to the latest data from the U.S. Bureau of Labor Statistics.

The March numbers were well above expectations, with employers adding 228,000 new jobs last month versus the 125,000 analysts had predicted. Unemployment aligned with forecasts, rising slightly to 4.2%. 

While employment was up across multiple sectors, the April 4 report called out declines in one area: federal government jobs. 

The DOGE effect: The BLS numbers "still only partially reflect layoffs" at the federal level, said Lisa Sturtevant, chief economist at Bright MLS, citing third-party data suggesting that DOGE-mandated cuts resulted in 216,000 job losses in March. Sturtevant also noted that the data counts federal workers who are on paid leave or laid off but receiving severance as employed.

But the layoffs don't appear to be influencing the D.C.-area housing market, at least not yet. While listings in the region are up, according to Bright's weekly market report, those increases are in line with seasonal trends.

Tariff impact unknown: The jobs data reflects the state of employment prior to President Donald Trump's tariff announcement on April 2 and is "likely not capturing the moment with respect to the actual strength of the economy," said Mike Fratantoni, chief economist at the Mortgage Bankers Association.

That could mean the latest jobs report "may be the last strong one for a while," Sturtevant said. "The stock market has had its biggest losses since 2020. The expected impacts of the administration's tariffs, along with general economic uncertainty, will mean that businesses will hold back on hiring and individuals and families will hold back on spending."  

Two possibilities for home sales: If prospective buyers tighten their purse strings, big purchases — like a house or car — could be off the table for now. While tariffs could lead to lower mortgage rates, at least in the short term, that may not be enough to overcome consumer anxiety around finances and inflation. 

Or … it could be enough. Wage growth, which came in at 3.8% in March, is currently outpacing inflation, and "interest rates on FHA and VA loans could soon drop below 6% in a matter of days," said NAR Chief Economist Lawrence Yun. If that happens, more first-time buyers may decide to jump into the market.

Rates on conventional 30-year mortgages are falling too, landing at 6.55% as of April 4, according to Mortgage News Daily — that's the lowest rate in more than five months. The combination of lower borrowing costs and robust job growth is "likely to lead to more home sales," Yun said. 

"In states with faster job additions, particularly in the Rocky Mountain time zone and the southern states, home sales could increase significantly. Be prepared."

What about the Fed? Depending on the direction of inflation and the likelihood of a recession, the Federal Reserve may choose to cut interest rates sooner or more aggressively, but analysts are divided. Goldman Sachs, for example, now expects to see three rate cuts this year after previously forecasting two, while Morgan Stanley went in the opposite direction, saying on April 3 that it no longer believes the Fed will cut rates at all in 2025.

Ahead of its next meeting in May, the Fed will be watching for clearer economic signals but "is likely to remain cautious with respect to any rate cuts so long as inflation is above target, and the job market data continues to come in strong," Fratantoni said.