Inflation Holds Steady as Housing Activity Pauses

[Derek Brickley]

Week of January 19, 2026 in Review

Inflation data landed right where markets expected, while housing contracts slowed during a seasonally tricky part of the year. Add in strong economic growth and a still-tight labor market, and the picture becomes clearer: conditions are stabilizing not stalling.

Here’s what matters this week and why it’s relevant for buyers, sellers, and agents right now.

Inflation Data Comes in As Expected (A Win for Rates)

The Fed’s preferred inflation gauge, Personal Consumption Expenditures (PCE), rose 0.2% in both October and November, keeping annual inflation at 2.8%. Core PCE (excluding food and energy) matched those results.

While inflation hasn’t fallen as fast as the Fed would like, it also isn’t re-accelerating and that’s important.

Why this matters: Lower, consistent monthly inflation readings make it easier for the Fed to stay patient — and potentially supportive — on interest rates. Even better, higher inflation prints from early 2025 will soon roll off the annual calculation, which could improve year-over-year progress toward the Fed’s 2% target.

➡️ Stable inflation = less upward pressure on mortgage rates.

Pending Home Sales Dip — Likely Seasonal

Pending Home Sales fell 9.3% from November to December, following four straight months of gains. Contracts were also down 3% year over year.

Before sounding alarms, context matters.

What’s really happening:

• December is historically volatile due to holidays, travel, and winter weather
• Inventory tightened again, limiting buyer options
• Closings rose, but new listings didn’t keep pace

With only 1.18 million homes on the market, buyers may have simply had fewer homes to choose from.

➡️ This looks more like a seasonal pause than a demand problem.

Economic Growth Was Stronger Than Expected

Final Q3 GDP came in at 4.4%, the fastest pace since 2023 and slightly above the initial estimate.

Growth was driven by:

• Strong consumer spending
• Increased exports
• Higher government spending
• A decline in imports (which boosts GDP)

Why this matters for housing: A growing economy supports income stability, confidence, and long-term housing demand — even if activity fluctuates month to month.

Labor Market: Few Layoffs, Few Hires

Initial jobless claims stayed very low at 200,000, while continuing claims dipped slightly to 1.85 million.

The takeaway:

• Employers aren’t laying people off
• Hiring remains cautious
• Gig and contract work continue to absorb displaced workers

This “low-fire, low-hire” environment keeps the economy steady — not overheating or collapsing.

What This Means Right Now

• Inflation is cooperating (even if slowly)
• Rates have room to stabilize or improve
• Housing demand hasn’t disappeared — it paused
• Inventory remains the real constraint

For buyers and sellers, timing and preparation matter more than headlines.

What to Watch This Week

• Federal Reserve rate decision (Wednesday)
• Home price data (Case-Shiller & FHFA)
• Jobless claims (Thursday)
• Producer Price Index (Friday)

Quick Rate Watch

Mortgage bonds are holding near key support levels, and the 10-year Treasury is sitting below an important long-term average. If inflation stays calm, rate conditions could improve further.

If you want to talk through how this impacts pricing, strategy, or buyer psychology, I’m always happy to connect.