Week of December 15, 2025 | Market Update

This week’s delayed government data finally filled in some important gaps — and the takeaway is pretty clear: inflation pressures are easing faster than expected, while the job market continues to lose momentum. Meanwhile, housing activity showed modest improvement as inventory tightened.

Here’s what matters most for real estate, buyers, and rates 👇

📉 Inflation Cools More Than Expected

Delayed inflation data showed consumer prices rose just 0.2% from September through November, with annual inflation easing to 2.7%, down from 3% previously. Core inflation (excluding food and energy) also came in softer, slowing to 2.6% year over year, the lowest level since early 2021.

Housing costs remain the biggest driver of inflation, accounting for roughly 35% of headline CPI and 44% of core CPI. Cooler shelter readings were a major reason inflation undershot expectations.

Why this matters: Cooling inflation gives the Federal Reserve more flexibility. When inflation slows without collapsing the economy, it supports lower interest rates — which directly impacts mortgage affordability and buyer confidence.

📉 Job Market Data Confirms Labor Softness

Delayed employment reports showed a choppy labor picture:

• October payrolls fell by 105,000
• November rebounded with 64,000 jobs added, slightly better than forecasts
• Revisions shaved 33,000 jobs off prior months

The unemployment rate climbed to 4.6%, its highest level since 2021. Even more telling, broader unemployment (which includes underemployed workers) jumped to 8.7%, and the mix of jobs shifted sharply toward part-time work.

Weekly jobless claims reinforced the trend, with continuing claims near 1.9 million, suggesting it’s taking longer for displaced workers to find new jobs.

Why this matters: A softer labor market increases pressure on the Fed to keep easing policy. While job growth hasn’t collapsed, momentum is clearly slowing — which historically supports lower mortgage rates over time.

🏡 Existing Home Sales Continue to Edge Higher

Existing home sales rose 0.5% in November, marking the third straight monthly increase, according to the National Association of REALTORS®. Sales remain slightly below last year’s pace, but momentum is improving.

Inventory dipped nearly 6% month over month to 1.43 million homes, though supply is still higher than a year ago.

Why this matters: Lower mortgage rates earlier this fall helped unlock pent-up demand. With inventory tightening seasonally, buyers who re-entered the market are finding fewer options — a dynamic that can stabilize prices even in a slower economy.

🏗️ Builder Confidence Ticks Higher Again

Home builder sentiment rose to 39 in December, the highest level since April. While still below the growth threshold of 50, expectations for future sales remained above 50 for the third straight month.

Why this matters: Builders are cautiously optimistic, but higher construction costs and economic uncertainty are still limiting supply. That means resale inventory — especially well-priced homes — remains extremely valuable in today’s market.

🏦 What This Means for Rates

The Fed has now cut the Fed Funds Rate three times this fall. While that rate doesn’t directly set mortgage rates, it influences overall borrowing costs and market sentiment.

Chair Jerome Powell continues to stress there is “no risk-free path,” meaning future rate decisions will depend heavily on incoming inflation and labor data.

Big picture:

• Inflation is easing faster than expected
• Job growth is clearly slowing
• Housing demand is stabilizing, not collapsing

That combination keeps the rate outlook constructive heading into 2026.

📅 What to Watch This Week

With markets heading into the holidays, data will be lighter:

• Tuesday: Delayed Q3 GDP report
• Wednesday: Weekly jobless claims
• Thursday: Christmas market closure

📊 Technical Snapshot

Mortgage bonds remain range-bound, with support near the 50-day moving average. The 10-year Treasury continues to trade sideways, capped by its 100-day average with support near 4.126%.

If you want to talk through what this environment means for buyers, listings, or rate strategy, I’m always happy to help.

— Derek