This edition of the Auto Market Weekly Summary includes updates on producer prices, tax refunds, consumer confidence and metrics on the housing market. Last week was a bit lighter on economic data than recent weeks. Last week started with the 2026 National Association of Business Economists (NABE) conference, three days of economic discussion and three Federal Reserve members speaking, providing a great primer for thoughts about where our economy may head in 2026. And here at Cox Automotive, our Manheim data continues to point towards a strong spring market, as Manheim values have accelerated more quickly in the back half of February. Check back on Friday, March 6, when the February Manheim Used Vehicle Value Index will be reported.

Bottom Line Up Front

Last week’s data presents a mixed but cautiously constructive picture for dealers heading into spring. Tax refunds are arriving larger than last year — up 10% to an average of $3,804 — putting real money in consumers’ pockets and already supporting used vehicle pricing at Manheim. Vehicle purchase intentions remain up double digits year-over-year despite softer confidence readings, and the 30-year mortgage rate falling below 6% for the first time in over three years may signal improving automotive lending conditions ahead.

On inflation, producer prices came in hotter than expected in January, but the broader outlook may be more encouraging than the headline suggests. At the NABE 2026 Policy Conference last week, three Federal Reserve governors offered perspective that reframes the inflation story: While tariffs pushed prices higher through much of 2025, policymakers view that impact as largely transitory — a one-time adjustment rather than a persistent trend. That means inflation could ease more meaningfully as we move through 2026, though the relief will likely be felt more in the second half of the year.

Perhaps the most striking insight from the conference: Fed governors indicated that current productivity gains in the economy are not yet being driven by AI investment — they’re coming from other factors. The implication is that AI-driven productivity is still ahead of us, potentially sustaining economic gains for years to come. Governors also noted that consumer spending growth is becoming more broad-based, no longer concentrated among the highest earners — a healthier demand signal for big-ticket purchases like vehicles.

Markets now expect two Fed rate cuts this year, most likely in June and September, consistent with the 10-year treasury yield declining below 4% this week. For dealers, the through-line is clear: The financing cost environment should improve in the second half of 2026, tax refund season is providing a near-term bridge, and the longer-term productivity and inflation outlook is more constructive than recent headlines suggest. The spring selling season arrives with real tailwinds — and a few risks still worth watching, as inflation persists and consumer balance sheets remain strained.

Producer Prices

Producer prices accelerated in January, rising faster than anticipated and signaling potential upward pressure on consumer prices ahead.

  • PPI increased 0.5% month-over-month in January, exceeding expectations of a 0.3% gain. On a year-over-year basis, producer prices are up 2.8%.
  • Services drove the increase, rising 0.8% in the month, while goods prices declined slightly as food and energy prices softened.
  • Trade services jumped 2.5% in January, indicating wholesalers are passing higher costs downstream — a potential headwind for consumer prices in the months ahead.
Tax Refund Update

Tax refund data was updated late Friday and continues to show a large gain for consumers early in the filing season. This additional purchasing power is one of the reasons we are seeing stronger price trends at Manheim as dealers purchase inventory for the spring selling season.

  • Tax refund season is delivering early tailwinds for consumers: the average refund check through February 20 was $3,804, up 10.2% against the same point last year.
  • Total refunds issued are running slightly lower in volume (-3.0%), but total dollars refunded are up nearly 7% year over year to $109.3 billion, a meaningful boost to consumer purchasing power — and the economy — heading into spring.
Housing Market: Prices Cooling, Sales Stalling

The S&P Cotality Case-Shiller National Home Price Index confirmed that 2025 was the weakest year for home price appreciation since 2011, with national prices up just 1.3% for the year. This pace was well below the 10-year annual average of 6.6%. Also, the second half of the year saw prices actually decline across all 20 tracked metro areas.

  • The 30-year mortgage rate fell to its lowest level in over three years last week, declining to 5.98% as the 10-year treasury yield fell under 4% early Friday. This may signal improving conditions for automotive lending rates in the coming months.
  • Geographic divergence widened sharply in December, with Chicago (+5.3%) and New York (+5.1%) leading all markets, while Sun Belt cities, including Tampa (-2.9%), Phoenix (-1.5%), Dallas (-1.5%) and Miami (-1.5%), extended their post-pandemic corrections.
  • Existing home sales fell 8.4% month over month in January to a 3.91 million SAAR, the slowest pace in several years, with inventory remaining tight at a 3.7-month supply, keeping the median sale price at a record January high of $396,800 despite the sales slump.
Consumer Confidence Index
  • The Conference Board’s Consumer Confidence Index showed modest improvement in February, though sentiment remains well below last year’s levels.
  • Vehicle purchase plans ticked down slightly in February but remain up 11.2% year over year, suggesting sustained interest in vehicle purchases despite broader confidence weakness.
  • The index rose 2.5% in February from an upwardly revised January reading, but remains down 8.9% year-over-year, reflecting continued consumer caution.
  • Present situation views declined 1.5% in February and are now down 13.1% against last year, indicating consumers are less satisfied with current economic conditions.
  • Future expectations rebounded 7.1% from a weak January reading, though they remain 3.7% below last year’s levels.