GDP Beats Forecasts, Gig Economy Influences Claims

[Derek Brickley]

Week of December 22, 2025 | Housing Market & Mortgage Rate Update

Mortgage rate outlook, housing market trends, and Federal Reserve insights for real estate professionals and homebuyers.

Who this matters for: Realtors advising buyers and sellers, homeowners watching rates, and anyone planning a move in early 2026.

Economic Growth Surges Past Expectations (Why This Matters for Rates)

After delays caused by the government shutdown, the first estimate of Q3 2025 GDP was released — and it came in strong. The U.S. economy grew at a 4.3% annualized pace, well above the 3.3% forecast and up from 3.8% in Q2. That marks a sharp rebound from the 0.6% contraction in Q1.

Through the first nine months of the year, economic growth is now averaging 2.5%.

What’s driving it: Consumer spending led the charge, boosted by a surge in electric vehicle purchases ahead of the EV tax credit expiration. Stronger exports and higher government spending also helped offset weaker business investment. A decline in imports — which subtract from GDP — added another lift.

Bottom line for real estate & rates: Strong growth keeps the economy resilient, but it doesn’t automatically push mortgage rates higher. When growth is paired with cooling labor data, it often leads to rate stability rather than spikes, giving buyers and sellers more confidence to act.

Jobless Claims Reflect Seasonal Patterns & the Gig Economy

Initial jobless claims fell by 10,000 last week to 214,000, remaining historically low. Meanwhile, continuing claims — people still receiving benefits — rose by 38,000 to 1.923 million, hovering near four-year highs.

What’s going on: Holiday timing plays a role, but the bigger trend is structural. Many displaced workers are opting for contract or gig-based income instead of filing for unemployment, especially when benefits don’t fully cover housing and living costs.

At the same time, elevated continuing claims suggest slower hiring, meaning people who lose jobs are taking longer to find new ones.

Bottom line for housing: A job market that isn’t collapsing — but is clearly cooling — supports the case for lower or steadier mortgage rates. That environment tends to bring sidelined buyers back into the market.

Mortgage Rate Context (The Big Picture)

When economic growth stays strong and the labor market softens, mortgage rates typically stabilize or drift lower instead of jumping higher. That’s because the Federal Reserve doesn’t need to aggressively fight inflation, but still has room to support the economy if hiring slows further.

This balance is exactly what the Fed is watching heading into 2026.

Family Hack of the Week

Start the new year on a sweet note with these quick and easy Cinnamon Rolls from Allrecipes (yields 9).

Preheat oven to 400°F and brush an 8-inch baking dish with melted butter. Whisk together flour, sugar, baking powder, and salt. Work in butter until crumbly, add milk, and form a soft dough. Roll into a square, brush with butter, sprinkle cinnamon-sugar filling, roll, slice, and bake 20–25 minutes. Finish with a simple cream cheese frosting while warm.

What to Watch This Week (Key Data Ahead)

• Pending Home Sales – Monday • Home Price Appreciation – Tuesday • Fed Meeting Minutes – Tuesday • Jobless Claims – Wednesday

Markets close Thursday for the New Year holiday.

Technical Snapshot (Rates Watch)

Mortgage bonds ended last week near the top of their trading range, with support at the 25- and 50-day moving averages and resistance at 99.88. The 10-year Treasury yield closed near multiple support levels, including the 4.126% Fibonacci level — a key area that often influences mortgage rate direction.

Final Takeaway

The economy remains sturdy, the labor market is cooling gradually, and mortgage rates are responding accordingly. For buyers, sellers, and real estate professionals, this backdrop continues to create windows of opportunity — especially as we head into early 2026.