Omaha Real Estate & Mortgage Market Update: Election Fallout, Falling Oil Prices, and a Rollercoaster Ride for Mortgage Rates
As we head into the weekend and look back at another eventful week in the financial markets, one thing is becoming increasingly clear: investors are still trying to make sense of several major developments, and we can expect plenty of uncertainty in the weeks ahead.
Let's start with this week's election results, which delivered a significant blue wave across the country. Financial markets have reacted sharply in both directions throughout the week as investors attempt to determine what the political shift will mean for the economy, financial markets, and government policy moving forward. With a divided government and less flexibility for the White House to advance its agenda, several areas are likely to receive immediate attention, including fiscal policy, the ongoing conflict with Iran, and the administration's approach to tariffs.
At the same time, we're seeing some renewed uncertainty surrounding the technology and AI sectors. Concerns about a potential slowdown in data center and AI infrastructure development following the election have contributed to another round of selling pressure in technology stocks. Considering how much of the nation's economic growth in 2026 has been tied to AI investment, any meaningful slowdown in that sector could have broader implications for economic growth, employment, and ultimately interest rates.
For the Omaha housing and mortgage markets, these developments matter because mortgage rates are heavily influenced by investor expectations surrounding economic growth, inflation, and the direction of the U.S. economy. When uncertainty increases, money often moves between stocks and bonds, creating the kind of volatility we've been experiencing recently.
On a more encouraging note, we're continuing to see signs of potential diplomatic progress between the United States and Iran. Whether influenced by the election results, a shift in political priorities, or simply a growing desire to find an off-ramp to the conflict, recent developments have created renewed optimism that a resolution may be getting closer. The President has also taken a noticeably softer tone following the election, expressing a willingness to work with Democrats on legislation and congratulating members of the opposing party.
That optimism has had a significant impact on energy markets. Oil prices have moved sharply lower, briefly dipping below $90 per barrel this morning. While there are still plenty of unanswered questions about whether these developments will translate into a lasting resolution, lower oil prices would be a very welcome development for inflation.
Why does this matter for mortgage rates? Energy prices influence transportation, manufacturing, production costs, and consumer spending. When oil prices remain elevated, those costs can filter throughout the economy and make it more difficult for inflation to cool. A sustained decline in energy prices could help ease those pressures, giving the bond market and eventually the Federal Reserve more flexibility.
Taken together, the election results and improving prospects for a resolution in Iran have provided a meaningful boost to the bond market, which is generally good news for mortgage rates. The 10-year Treasury yield briefly touched 4.81% yesterday, continuing its decline from highs of 5.36% just over a month ago. That is a meaningful improvement and has helped create some welcome relief for mortgage rate sheets.
Of course, the bond market rarely gives us a smooth ride for very long. Enter today's Employment Report.
At virtually every level, the latest jobs report came in considerably stronger than economists anticipated. The economy added 165,000 jobs compared with expectations of just 59,000. Previous months also received meaningful upward revisions, unemployment came in lower than expected at 4.1% versus 4.2%, and average hourly earnings increased by a stronger-than-anticipated 0.4%.
These are exceptionally strong numbers and reinforce the idea that the U.S. economy continues to perform remarkably well despite the many uncertainties surrounding it.
The immediate reaction in the bond market was negative, with investors selling bonds in response to the stronger employment numbers. Strong employment and wage growth can create additional inflationary pressure and reduce the likelihood of aggressive Federal Reserve rate cuts. Ordinarily, that would put upward pressure on mortgage rates. However, the positive momentum generated by the election and developments in Iran appears to be helping limit the damage for now.
For Omaha-area homebuyers, this is another reminder that mortgage rates can move quickly in either direction, sometimes based on a single economic report. While the recent improvement is encouraging, we haven't yet reached a point where we can confidently say that a sustained downward trend is underway.
Looking ahead, the remainder of 2026 will likely be spent trying to answer some very important questions about what the economy and mortgage rate environment could look like in 2027. A few developments deserve particular attention:
Will the election results help accelerate a lasting resolution to the conflict with Iran? If so, how quickly could oil and energy prices return to pre-war levels? A sustained decline in energy costs could provide meaningful relief to inflation and potentially create a more favorable environment for mortgage rates.
Will the election results create a slowdown in AI and technology infrastructure investment in 2027? A significant portion of economic growth in 2026 has been tied to AI development. If that investment slows considerably, could it translate into weaker GDP growth, reduced business investment, and eventually a softer labor market? While weaker economic conditions can create opportunities for lower interest rates, they could also bring broader economic challenges.
What will become the White House's primary economic priorities following the midterm elections? With greater potential for congressional gridlock, the administration may increasingly rely on executive actions to advance its agenda. Any significant changes in fiscal policy, trade, tariffs, or other economic priorities could have an immediate impact on financial markets.
What does all of this mean for the Omaha real estate and mortgage market?
We should expect continued volatility over the next several weeks as investors work through the implications of the election, international developments, and incoming economic data. There are certainly some encouraging developments that could help mortgage rates improve heading into 2027, particularly if energy prices continue to decline and inflation begins to moderate.
For buyers and sellers in the Omaha market, the important takeaway is that we're seeing several forces pulling mortgage rates in opposite directions. The recent improvement in rates is encouraging, but strong economic data and persistent inflation remain obstacles to more substantial declines.
In a market where affordability continues to be a major consideration for buyers, even modest improvements in mortgage rates can help expand purchasing power and bring more prospective buyers off the sidelines. For now, we'll continue watching the bond market closely, because the next few weeks could provide some important clues about where mortgage rates are headed as we approach 2027.
As always, keep a close eye on rate sheets. This market isn't finished moving just yet!
