Zillow Warns March Jobs Report Masks Housing Market Challenges

Surface Numbers Hide Troubling Trends

While March's jobs report appeared encouraging with 178,000 new nonfarm payroll jobs and unemployment dropping from 4.4% to 4.3% , real estate giant Zillow issued a stark warning about what lies beneath the surface. The company did not consider the jobs report to be good news for homebuyers, with details signaling that buyers could struggle to afford housing as the home-buying season gets underway .

The number of "discouraged workers" — people who believe no work is available for their situation — went up by 144,000 in March, meaning part of the unemployment rate improvement reflects more people moving to the sidelines rather than a stronger hiring environment . This troubling detail suggests the labor market's apparent strength may be misleading.

Adding to concerns, revised employment numbers showed February jobs dropped from -92,000 to -133,000 after revision , painting a bleaker picture of recent employment trends than initially reported.

Wage Growth Disappoints Despite Headlines

Wage growth wasn't particularly impressive in March, with average month-over-month hourly earnings increasing just 0.2% and annual earnings rising 3.5% — down from February's monthly increase of 0.4% and year-over-year incline of 3.8% . This deceleration in wage growth comes at a critical time when housing affordability remains stretched for many Americans.

Zillow noted that revisions to January and February data "reinforce a pattern of higher month-to-month volatility without much underlying momentum," with March's employment gains not widespread among different sectors . This uneven job growth pattern raises questions about the sustainability of current employment trends.

Housing Market Faces Confidence Crisis

The employment uncertainty creates a ripple effect through the housing market that goes beyond simple affordability calculations. Zillow explained that a softer job market tends to make homebuyers pull back, particularly first-time buyers or those stretching to afford payments, because housing decisions hinge on how secure people feel in their jobs and confidence about future earnings .

This confidence factor manifests in three key ways: renters renew leases instead of moving up, prospective buyers wait for more certainty, and potential sellers hold off listing their homes . The psychological impact of employment uncertainty can outweigh even favorable mortgage rate movements.

While Zillow acknowledged that "a weaker jobs report can support lower bond yields and mortgage rates, which helps affordability at the margin," the company emphasized that "for housing turnover, confidence often matters as much as rates — and in a cooling-labor scenario, the confidence channel can dominate" .

Mixed Signals for Spring Season

Despite these underlying concerns, the housing market showed some resilience in March. Newly pending listings rose 4.6% from a year earlier to record the second-largest monthly total since the pandemic boom ended, while average daily page views per listing on Zillow jumped 32% higher than last March .

However, mortgage rates climbed from 5.98% at the end of February to 6.38% in late March, cutting into affordability gains and causing the typical mortgage payment to rise 1.5% from February . This rate increase has already begun to chip away at the modest affordability improvements seen earlier in the year.

Looking ahead, Zillow senior economist Orphe Divounguy noted that while softer growth might help mortgage rates ease and support affordability, "households still need strong income growth and confidence in job security to list, buy, or move" . The combination of employment uncertainty and rising borrowing costs suggests the spring buying season may face more headwinds than initially anticipated, despite some encouraging activity metrics.