Housing Stalls, Labor Holds Firm as Trade Gap Widens — Evening Brief – 02.19.26

U.S. economic data delivered a mixed but resilient picture to start the year, with housing activity remaining soft, labor markets holding steady and manufacturing sentiment improving even as the trade deficit widened sharply. 

The National Association of Realtors’ Pending Home Sales Index slipped 0.8% month over month to 70.9, following a revised 7.4% drop in December to 71.5, and was down 0.4% from a year earlier. Regionally, contracts fell 5.7% in the Northeast and 4.5% in the South but rose 5.0% in the Midwest and 4.3% in the West. 

“Improving affordability conditions have yet to induce more buying activity,” said NAR Chief Economist Lawrence Yun. “Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year,” Yun added. 

Labor market data pointed to continued resilience. Initial jobless claims fell by 23,000 to 206,000 in the week ended Feb. 14, the largest weekly decline since November 2025 and below consensus expectations, while the four-week moving average edged down to 219,000. Continuing claims rose to 1.869 million in the week ended Feb. 7, and the advance insured unemployment rate held at 1.4%. 

Manufacturing sentiment in the Philadelphia Fed region strengthened, with the February index rising to 16.3 from 12.6, beating forecasts. The diffusion index for future general activity jumped to 42.8, even as current employment and new orders softened and prices paid eased. 

Trade data, meanwhile, weakened. The U.S. international trade in goods and services deficit widened 32.6% in December to $70.3 billion as imports rose 3.6% and exports fell 1.7%, pushing the three‑month average deficit to $50.7 billion.