🍵 Market Update 02/23 │ GDP Growth Falls to 1.4%, IEEPA Tariffs Ruled Illegal

Macro
• Mortgage rates 6.04% for the week
• National purchase apps ⬇️ 2.7% WoW, ⬆️ 9.1% YoY
• Q4 GDP 1.4% vs 3.0% expected

Central OH
• YTD CLOSINGS: 2,603, ⬇️ 3.2% over LY.
• YTD MEDIAN sales price: $325,000, ⬆️ 4.8% over LY.
• YTD NEW LISTINGS: 3,622 units, ⬆️ 12.8% over LY.
• CURRENT ACTIVE INVENTORY: 3,468 homes ⬇️ 2.8% WoW

On February 20th, 2026, the U.S. Supreme Court ruled 6-3 that President Trump’s tariffs imposed under the International Emergency Economic Powers Act are illegal. The Court held that IEEPA allows the President to regulate or block transactions during emergencies, but it does not authorize imposing taxes or duties. Chief Justice Roberts cited the Major Questions Doctrine, stating Congress must clearly grant authority for actions of major economic significance. The ruling invalidated the reciprocal and certain country-specific tariffs tied to immigration and opioid emergencies. Markets reacted with a risk-on tone, and Treasury yields moved higher late in the week.

Within hours, the White House signaled that its broader tariff strategy would continue. Treasury Secretary Scott Bessent stated the ruling addressed the legal pathway, not tariffs themselves, and projected 2026 tariff revenue would remain largely intact. The administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, later increased to 15%, and confirmed continued use of Sections 232 and 301. The Court did not order automatic refunds on the estimated $142B to $175B already collected, leaving potential repayment to future litigation.

Highlights
• 6-3 decision in Trump v. V.O.S. Selections
• IEEPA does not authorize tariffs or duties
• Reciprocal and certain country-specific tariffs invalidated
• No automatic refunds ordered on $142B to $175B collected
• New 10% tariff under Section 122, later raised to 15%

Takeaway: Despite the headline ruling, the administration’s shift to alternative legal authorities leaves overall tariff pressure largely unchanged, keeping trade policy as an active variable for inflation and rates.

The Bureau of Economic Analysis reported Q4 2025 real GDP growth at 1.4%, down from 4.4% in Q3 and well below the 3.0% expectation. A 43-day government shutdown from October 1 to November 12 reduced federal spending by 16.6% and cut roughly 1 point from growth. Consumer spending slowed to 2.4%, and goods purchases slipped 0.1%. Exports fell 0.9% after a 9.6% surge in Q3. Inflation remained elevated, with PCE at 2.9% and Core PCE at 2.7%.

Highlights
• Q4 GDP 1.4% vs 3.0% expected
• Q3 GDP was 4.4%
• Federal spending ⬇️ 16.6% during shutdown
• Consumer spending 2.4% vs 2.9% in Q3
• Residential investment ⬇️ 1.5% vs ⬇️ 7.1% in Q3
• Core PCE 2.7%

Takeaway: Slower growth with inflation near 3% keeps the Fed cautious, which limits near-term mortgage rate relief.

The national story last week was slower growth and steady rates. GDP slowed sharply to 1.4% in Q4, well below expectations. Inflation as measured by PCE ran 2.9%, which keeps the Fed cautious. Mortgage rates held steady at 6.04%, but purchase demand softened week over week.

Tailwinds
• Purchase apps ⬆️ 9.1% YoY
• 78.8% of mortgages under 6%, limiting forced selling
• Central OH pendings ⬆️ 24.5% YoY

Headwinds
• GDP slowed to 1.4%
• Core PCE 2.7% in Q4
• Purchase apps ⬇️ 2.7% WoW

The Truflation CPI Index uses real-time consumer spending data to track inflation daily. It updates faster than traditional inflation measures to better reflect price changes in today’s economy.

Market Dynamics: A Seller’s Market shifting toward Buyer-friendly conditions.

Inventory remains materially higher than last year, but the pace of absorption is steady. Closings over the last four weeks are down slightly year over year, while new listings continue to outpace last year’s levels. Median pricing is still holding firm at $325,000, up 4.4% over the last four weeks. Days on market has stretched to 48, and over half of active listings have reduced price at some point. This remains a negotiating market, but pricing has not broken.

• CURRENT ACTIVE INVENTORY: 3,468 homes ⬆️ 35.3% over LY & ⬇️ 2.8% WoW

Last 4 Weeks (01/26 - 02/22)
• CLOSINGS: 1,536, ⬇️ 2.4% over LY
• NEW LISTINGS: 1,834, ⬆️ 5.4% over LY
• MEDIAN sales price: $325,000, ⬆️ 4.4% over LY
• ⬇️ 52.0% of active listings have reduced price
• AVG DOM: 48, ⬆️ 17.1% over LY
• MONTHS of SUPPLY: 2.4

Year-to-Date Snapshot
• YTD CLOSINGS: 2,603, ⬇️ 3.2% over LY
• YTD NEW PENDINGS: 3,807 units, ⬆️ 15.9% over LY
• YTD NEW LISTINGS: 3,622 units, ⬆️ 12.8% over LY
• YTD MEDIAN sales price: $325,000, ⬆️ 4.8% over LY
• YTD AVG $/SF: $206.98, ⬆️ 2.9% over LY
• YTD SP/OLP% (Sale Price/Original List Price): 98.1% of asking price, ⬆️ 0.8% over LY
• YTD SP/LP% (Sale Price/Last List Price): 99.3% of asking price, ⬆️ 0.3% over LY

Showings & Affordability

An affordability index of 100 means the median household can afford the mortgage on a median-priced home. Above 100 indicates greater affordability, below 100 indicates reduced affordability.

Souces:
· 30-Year Fixed Rate Mortgage Average in the United States (MORTGAGE30US) - Federal Reserve Economic Data (FRED) - https://fred.stlouisfed.org/series/MORTGAGE30US
· 30-Year Fixed Mortgage Rates - Mortgage News Daily - https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed
· Mortgage Applications, Purchase Index - Mortgage Bankers Association via Trading Economics - https://tradingeconomics.com/united-states/mba-purchase-index
· CME FedWatch Tool - CME Group - https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
· U.S. Inflation Rate - Truflation - https://truflation.com/marketplace/us-inflation-rate