Jerome Powell often says that the Fed is “data dependent.” Well, the latest data clearly showed both a slowing job market and easing inflation rates. The December Fed rate cut now looks well-justified, but the market remains skeptical that the Fed will cut again on January 28.

Google has started showing listing data in some search results. Look up the best barbecue joints in Tempe and get a side of listings near ASU? Want to see the details or request a tour? Any time Google gets involved in a new sector, incumbents have to take the threat seriously. Zillow shares certainly are. [Mike DelPrete]

Builder confidence rose (but stayed at a low level). The National Association of Homebuilders’ index rose 1 point to 39, but that means it’s been below 50 (pessimistic) for all of 2025. 67% of builders said that they were providing sales incentives (the highest share post-COVID).

BLS jobs report = weakness all around. We got data for both October and November, and it painted a very clear picture of a slowing job market.

• Jobs growth of just 64K in November, but that was after -108K (affected by the government shutdown) in October. In addition, previously released figures were revised down by 59K.
• The narrow unemployment rate (U-3) rose from 4.4% in September to 4.6% in November (we didn’t get the October number). The broader unemployment rate (U-6) rose from 8.0% in September to 8.7% in November. Ignoring COVID, that’s the highest since March 2017.
• The number of permanent (full-time) jobs actually fell by -983K between September and November, while the number of part-time jobs rose by 1.0M. So we’re replacing full-time jobs with part-time jobs. Not a good trend.

And remember: Fed Chair Jerome Powell estimated that these numbers were probably overestimated by ~60,000/month due to the birth/death model and other factors. If he’s right, that would take October to -168K and November to +4K (essentially flat).

TP: The two Fed members that dissented at the last meeting (preferring to keep the Fed Funds Rate unchanged) have got to look at this report and think ‘maybe I’m missing something’. The U-3 has now climbed from a low of 3.4% in April 2023 to 4.6% in November 2025, and the U-6 has gone from a low of 6.6% in April 2023 to 8.7% in November 2025.

Weekly ADP “NER Pulse” shows improvement. ADP reported that the average weekly private job gains (for the month ended November 29) was 16,250 — a big improvement from +2,750/week previously.

Lowest “core” CPI in years. We also got October and November inflation data, and it was much tamer than expected. Both “headline” and “core” CPI (Consumer Price Index = inflation for you and me) climbed just +0.2% over the last two months, allowing the annual inflation rate for “headline” CPI to fall to +2.7% YoY and “core” CPI to drop to 2.6% YoY. That’s the slowest rate of “core” CPI growth since April 2021! [Source: BLS]

TP #1: Shelter costs (which make up 35% of “headline” and 44% of “core” CPI rose just 0.2% over the last two months. As a result, annual Shelter cost growth plunged to just +3.0%!

TP #2: If you annualize the last 3 months of CPI growth, you get 2.0% YoY for “headline” and 1.7% YoY for “core”. When you consider that the Fed’s preferred measure of inflation (“core” PCE) is generally LOWER than the CPI (due to category weighting differences), this means that we’re running at/below the Fed’s 2% target.

Crude oil prices are down 22% this year. What does this have to do with housing? Directly, not much. But it can have a big impact on “headline” inflation figures (6.5% weighting in “headline” CPI), and that can obviously affect the Fed’s policy decision.

The Hottest Markets for 2026

’Tis the season when the property portals predict which housing markets will perform best in the year ahead.

The three portals broadly agree that the best opportunities are in the Northeast and Midwest, but each is looking at slightly different things.

NAR’s “Housing Hot Spots for 2026”: They’re looking for the best combination of a strong local economy (jobs growth → housing demand ) and relatively affordable and available inventory of homes for sale. With a large Millennial population, Charleston’s housing demand would benefit significantly from a drop in rates, and affordable inventory is growing.

Realtor.com’s “Top Housing Markets for 2026”: They’ve got forecasts for each of the metros and are simply adding up their projected transaction volume growth and median sales price growth. (In other words, ranking the cities on forecast transaction value growth.) Hartford tops the list with 7.6% forecast volume growth and 9.5% forecast price growth = 17.1%.

Zillow’s “Most Popular Listings of 2025”: OK, I kind of cheated here. This isn’t a forecast, it’s just a snapshot of which cities saw the most online search activity this year. In any case, many of the same states are showing up. Holy Toledo!

Bond and Mortgage Market

If you were a Fed member and you were looking for justification to cut rates further, this was your week. A big jump in the unemployment rate, plus a big drop in the rate of inflation? Yes, please! Unfortunately, the global rise in bond yields seems to be keeping the yield on the 10-year US treasury bond higher than it would be otherwise. Still, average 30-yr mortgage rates (from Freddie Mac’s PMMS survey) remained below 6.25%, and the start of the spring selling season isn’t far away.

Note: After the rate cut on Dec 10, the Fed Funds Rate policy range is now 3.50–3.75%. The probabilities below come from the CME Group website and are implied from the Fed Funds Rate futures market.

• January 28 FOMC Meeting: 73% probability that the Fed does nothing; only a 27% probability of a 25 bps rate cut.
• March 18 FOMC Meeting: 47% probability that rates are 25 bps below current. That means a rate cut at either the January 28 or the March 18 meeting, but not at both. 43% probability that the Fed Funds Rate target range is kept at 3.50–3.75%. In other words, no cut at either the January or March FOMC meetings.

They Said It

“In positive signs for the market, builders report that future sales expectations have been above the key breakeven level of 50 for the past three months and the recent easing of monetary policy should help builder loan conditions at the start of 2026. However, builders continue to face supply-side headwinds, as regulatory costs and material prices remain stubbornly high. Rising inventory also has increased competition for newly built homes.” — Robert Dietz, NAHB’s Chief Economist