LOS ANGELES REAL ESTATE REPORT

Last Update: February 24, 2026

Mortgage Rates Edge Higher Amid Supreme Court Tariff Ruling and Mixed Economic Data

A quick note from us

This week brought a notable shift in mortgage markets as the Supreme Court struck down tariffs imposed last year. This ruling has caused mortgage rates to rise slightly due to investor concerns about potential increases in the government deficit and bond issuance. Meanwhile, economic data painted a mixed picture. The fourth quarter GDP growth slowed sharply to 1.4%, well below expectations, highlighting weaker consumer spending and exports. Core PCE inflation ticked up to 3.0%, the highest since April 2024, indicating that inflation remains above the Federal Reserve's 2.0% target. On the housing front, starts and permits improved to their highest levels in months, yet builder sentiment remains negative with many builders offering incentives and price cuts. These factors combine to create a complex environment for buyers and sellers alike.

What this means for buyers: Buyers should prepare for slightly higher mortgage rates and remain vigilant about inflation trends that could influence future rate movements. The increase in housing starts may eventually expand inventory, but current builder sentiment suggests continued market caution. Buyers may find opportunities as some builders offer incentives and price reductions.

What this means for sellers: Sellers face a market where mortgage rates have edged up, potentially tempering buyer demand. Builder incentives and price cuts indicate competitive pressure from new construction. Pricing strategies will be critical to attract buyers who are navigating higher borrowing costs and a cautious market.

Economic Growth Slows Sharply in Q4 2025

The U.S. economy expanded at an annualized rate of just 1.4% in the fourth quarter, a significant slowdown from 4.4% in the previous quarter and below consensus forecasts. Consumer spending and exports were notably weaker, signaling a cooling in economic activity as we entered 2026.

What this means for buyers: Slower economic growth could moderate home price appreciation, offering some relief to buyers. However, cautious consumer spending may also reflect broader financial uncertainty.

What this means for sellers: Sellers may encounter a more restrained market as economic momentum slows. Pricing and marketing will need to reflect the tempered demand environment.

Inflation Remains Elevated Above Fed Target

Core PCE inflation rose to 3.0% year-over-year in December, the highest since April 2024 and above the Federal Reserve's 2.0% target. This persistent inflation pressure keeps the Fed vigilant and could influence future monetary policy decisions.

What this means for buyers: Elevated inflation may lead to continued pressure on mortgage rates, increasing borrowing costs over time. Buyers should consider locking in rates when possible.

What this means for sellers: Sellers may benefit from inflation-driven price increases but should be mindful of how rising rates could impact buyer affordability.

Housing Starts and Permits Rise, Builder Sentiment Remains Negative

December housing starts rose 6% from November to the highest level in five months, with single-family starts reaching their best pace since February. Building permits also increased to the highest level since March. Despite this, the NAHB builder sentiment index remains below 50 for 22 consecutive months, with many builders offering sales incentives and cutting prices.

What this means for buyers: Increased housing starts and permits suggest more inventory will enter the market, potentially easing competition. Buyers may find negotiating leverage as builders offer incentives.

What this means for sellers: Sellers face growing competition from new construction, especially as builders use incentives and price cuts to attract buyers. Strategic pricing and marketing are essential.

Market Reaction to Supreme Court Tariff Decision

The Supreme Court's decision to strike down tariffs has unsettled mortgage markets. Investors worry about reduced government revenue leading to increased bond issuance and higher yields, which in turn push mortgage rates upward.

What this means for buyers: Buyers should anticipate potential further increases in mortgage rates as bond yields adjust. Timing and rate locks may be more important in this environment.

What this means for sellers: Higher mortgage rates could dampen buyer demand, making it crucial for sellers to price homes competitively and highlight value.

Upcoming Economic Reports to Watch

This week features a light economic calendar with Consumer Confidence data on Tuesday, Durable Goods Orders on Wednesday, and the Producer Price Index on Friday. These reports will provide additional insights into inflation and economic sentiment that could influence mortgage markets.

What this means for buyers: Staying informed on economic indicators can help buyers anticipate market shifts and make timely decisions.

What this means for sellers: Sellers should monitor these reports as they can affect buyer sentiment and financing conditions.

Closing Remarks

Every buyer and seller enters the market with different priorities. For some, it is achieving the strongest possible price. For others, it is timing, certainty, or aligning the sale of one property with the purchase of another. In a market where mortgage rates are adjusting, inflation remains elevated, and new construction is increasing competition, strategy matters more than ever. The way a property is priced, negotiated, and managed from contract to closing can directly influence both your financial outcome and your timeline. The difference between a disciplined plan and a reactive one can equate to tens, and in some cases hundreds, of thousands of dollars. If you would like clarity on your home’s value in today’s rate environment, or a thoughtful plan for what you can confidently purchase as conditions evolve, we would welcome the conversation.

Jack Misraje

323-209-5225

Karen Misraje

310-488-1030