Week Of: January 5th, 2026

01-02-26 10:33am With a lack of major economic news, the final couple of weeks of the year were relatively quiet for mortgage markets. While recent data suggests that economic growth remains on track, consumers are concerned about the outlook for the new year. Mortgage rates ended just slightly higher.

The latest confidence survey published by the Conference Board revealed that consumers remain worried about the economic outlook and the impact of higher tariffs. In December, the index unexpectedly dropped to the lowest level since the new tariffs in April. The decline was steepest among younger and lower-income consumers. In particular, the outlook for future labor market conditions weakened.

Gross Domestic Product (GDP) is the broadest measure of economic activity. Delayed nearly two months by the government shutdown, the report released this week covers the period from July through September, making this data fairly backward-looking. During the third quarter of 2025, U.S. GDP grew at an annualized rate of 4.3%, up from 3.8% in the second quarter, and well above the consensus forecast for an increase of 3.2%. This was the strongest expansion since the third quarter of 2023. Economists from one firm estimated that nearly 70% of the growth came from spending related to Artificial Intelligence and household consumption. Consumer spending rose by a solid 3.5% in the third quarter following a 2.5% increase in the second quarter. Strength was also seen in government spending and exports.

The latest data on home prices from the Federal Housing Finance Agency was encouraging for buyers struggling with affordability. In October, average home prices were just 1.7% higher than a year ago, the smallest annual price increase since March 2012. During the pandemic, annual gains of around 20% were often seen. This also may be a positive sign for future inflationary pressures, since the housing component accounts for a large portion of the inflation index.

Looking ahead, investors will continue to monitor comments from Fed officials for hints about future monetary policy. For economic reports, the ISM national manufacturing sector index will be released on Monday and the services sector index on Wednesday. The JOLTS report on job openings also will come out on Wednesday. The key Employment report will be released on Friday, and these figures on the number of jobs, the unemployment rate, and wage inflation are always closely watched.

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