While Wall Street Eyes Oil Shocks, Housing Quietly Softens

Editor’s Note: There won’t be any commentary from 3/13 through 3/20.

While Wall Street Eyes Oil Shocks, Housing Quietly Softens

• There were 1.3 million existing homes for sale in February.

• The number of days on the market keeps rising.

• The median sales price is down 8% from June’s peak.

The inflation outlook is testing investors’ patience all over again…

Three months into a new year and the narrative feels eerily familiar. Wall Street is once again preoccupied with inflation. Even as the Consumer Price Index (“CPI”) inches closer to the Federal Reserve’s 2% target, policymakers aren’t signaling any urgency to adjust interest rates. Their stance has been unwavering: inflation still feels too sticky for comfort, and they want last year’s rate cuts to work their way through the system. Historically, that lag runs six to eight months. From their vantage point, time is an asset — and they intend to use it.

Now, another inflation threat has moved to the forefront: the fallout from the U.S. strikes in Iran. Money managers are increasingly focused on the risk that disrupted oil flows from the Persian Gulf could tighten global supply. The same level of demand is now competing for fewer available barrels, a setup that pushes fuel prices higher. And the longer the region remains unstable, the more that pressure compounds. The concern is that a prolonged squeeze in energy markets could force the Fed to rethink the pace, or even the likelihood, of rate cuts this year.

And while markets fixate on the geopolitical inflation story, they’re missing a signal hiding in plain sight: housing price growth has downshifted. Redfin reports that homes sat on the market for an average of 66 days in February. That’s longer than January’s 61 days, longer than 2025’s 59 days, and the slowest turnover since 2016, when the average was 73. That’s not a one‑off; that’s a cooling trend…

The National Association of Realtors (“NAR”) reinforced the same message this week. Existing home sales held at an annualized 4 million in February, still hovering near the bottom of a multi‑year range. At the same time, inventory has climbed back to pre‑pandemic norms. More supply paired with softer demand is putting downward pressure on prices. And when home prices cool, inflation follows — giving the Fed more room to ease later this year. That policy cushion is one of the quiet forces that could help keep the S&P 500 on a steady upward track as 2026 unfolds.

But let’s move from narrative to numbers.

Each month, NAR releases a suite of housing indicators. Existing home sales account for 85–90% of total activity, making them a reliable read on market health. In February, months’ supply — the time needed to sell all listed homes — held at 4.2. Winter usually suppresses supply as sellers pull listings, so the stability is notable. It’s also in line with last year’s average and marks a continued climb from the pandemic lows...

NAR’s time‑on‑market data mirrors Redfin’s. Property lingered for 66 days in February, up from 57 in 2025 and 50 in 2024. Said another way, buyers are taking their time.

And prices? They’re softening. Realtor.com reports the median listing price per square foot was $223 in February, down 2% year‑over‑year. It was the sixth straight month of annual declines. The only other time we’ve seen consecutive annual declines was in June and July of 2023, based on a decade of records. In plain terms, sellers are losing leverage…

Sale prices tell the same story. NAR shows the median price of an existing home sold in January at just over $398,000. That was flat versus last year, up only 0.3% from December, and well below the typical seasonal gain of 6.6% since 2018. February marked the eleventh straight month of annual price growth at 2% or less.

The last time we saw a stretch like that was mid‑2023, when the Fed was still tightening. The market hasn’t looked this soft since then…

Bottom line: inventory is behaving exactly as it should in a cooling market — it’s capping prices. A shaky labor backdrop and a Fed unwilling to rush into more easing are keeping would‑be buyers on the sidelines. And with most homeowners either locked into low rates or more inclined to refinance than relocate, sales could remain sluggish.

Housing carries real weight in the inflation calculus. It accounts for roughly 35% of CPI and about 17% of the Personal Consumption Expenditures (“PCE”) index. When home prices ease, rent dynamics follow. That pulls down owners’ equivalent rent, one of the most influential components in both CPI and PCE.

Elevated supply should keep that disinflationary pressure moving in the right direction, cooling inflation over the long run and improving the odds of further stimulus. That easing cushion is a subtle but meaningful tailwind for a steady S&P 500 climb as the year progresses.

Five Stories Moving the Market:

Saudi Arabia’s East-West pipeline and a smaller Emirati pipeline are bypassing the Strait of Hormuz; they are currently the only ways to get a significant amount of oil out of the Persian Gulf into world markets – WSJ. (Why you should care – Saudia Arabia expects to be sending seven million barrels of oil through the pipeline within days, with five million making it to global markets daily)

Oracle’s quarterly infrastructure business revenue increased 84% to $4.9 billion; that marked a faster jump than the 79% anticipated by analysts and a 68% sales rise in the previous quarter – Bloomberg. (Why you should care – the company endorsed higher-than-expected revenue for the current quarter, while leaving its capital expenditure outlook unchanged))

The International Energy Agency has proposed the largest release of oil reserves in its history to bring down crude prices that have soared during the U.S.-Israel war with Iran; the release would exceed the 182 million barrels of oil that IEA member countries put onto the market in two releases in 2022 when Russia launched its full-scale invasion of Ukraine – WSJ. (Why you should care – 182 million barrels would match about 9 days’ worth of supply that flows through the Strait of Hormuz)

International oil majors Chevron and Shell are closing in on the first big oil production deals with Venezuela since the U.S. capture of President Nicolas Maduro in January; the deals would allow both companies ​to boost production in coveted oil regions in the South American country – Reuters. (Why you should care – while this is a step toward boosting global supply, it will still take a lot of time and investment)

U.S. Senator Thom Tillis reiterated his intention to block any Federal Reserve nominations moving through the Senate Banking Committee until the Department of Justice finishes its investigation into Fed Chair Jerome Powell; the statement came on the heels of what he called a “good meeting” with the White House’s Fed chair nominee, Kevin Warch – Bloomberg. (Why you should care – the statement implies the Fed chair vote process is on indefinite hold)

Economic Calendar:

Earnings: CPB

China – Exports, Imports for February

Japan – Machine Tool Orders (YoY) for February (2:00 a.m.)

ECB’s De Guindos (Vice President) Speaks (4:30 a.m.)

U.S. - MBA Mortgage Applications (7 a.m.)

U.S. – CPI for February (8:30 a.m.)

Fed’s Bowman (Board Member, Voter) Speaks (8:30 a.m.)

U.S. – Real Earnings for February (8:30 a.m.)

U.S. - Energy Information Administration Crude Oil Inventory Data (10:30 a.m.)

ECB’s Schnabel (Board Member) Speaks (11:10 a.m.)

Treasury Auctions $39 Billion in 10-Year Notes (1 p.m.)

U.S. – Federal budget balance for February (2:00 p.m.)