Mortgage Market News: Economic Growth Surprises as Labor Trends Continue to Shift
As we move into early 2026, recently released economic data is offering important context for where the U.S. economy stands and what it may signal for interest rates, housing, and consumer confidence in the months ahead.
Although the data reflects activity from the third quarter of 2025, its delayed release makes it especially relevant now, as markets reassess growth momentum and labor conditions entering the new year.
Here are the key takeaways.
Economic Growth Came in Stronger Than Expected
The first estimate of Q3 2025 Gross Domestic Product (GDP) showed the U.S. economy expanding at a 4.3% annualized pace, significantly higher than the 3.3% forecast.
This marked:
An acceleration from 3.8% growth in Q2
A sharp rebound from the 0.6% contraction in Q1
An average growth rate of 2.5% over the first nine months of the year
Why this matters:
GDP is one of the broadest measures of economic health, capturing consumer spending, business investment, government spending, and trade activity. Stronger-than-expected growth reinforces the idea that the economy entered late 2025 with solid momentum.
Consumer spending, the largest contributor to GDP, played a major role. Purchases were boosted in part by a surge in electric vehicle sales ahead of the expiration of EV tax credits at the end of Q3. Government spending and stronger exports also contributed, while a decline in imports helped lift the overall GDP figure.
For housing and mortgage markets, sustained economic growth can support employment and income stability, two critical factors for long-term homebuyer demand.
Jobless Claims Reflect Seasonal Patterns and the Gig Economy
Labor market data continues to show mixed signals.
Initial Jobless Claims declined by 10,000, with 214,000 individuals filing for unemployment benefits for the first time.
Continuing Claims rose by 38,000, reaching 1.923 million, near multi-year highs.
What’s happening beneath the surface:
First-time claims remain relatively low, which may reflect seasonal factors, including employers holding off on layoffs around the holidays. Another key influence is the growing role of the gig economy. Many displaced workers are opting for contract or app-based work rather than filing for unemployment, especially when benefits fall short of covering housing, healthcare, and living expenses.
At the same time, elevated continuing claims suggest that hiring has slowed. When employers become more cautious, people who do lose jobs tend to remain on benefits longer, even if layoffs themselves remain limited.
This combination points to a labor market that is no longer overheating, but also not collapsing, an important balance as policymakers assess future rate decisions.
What This Means Heading Into 2026
Together, these data points paint a picture of an economy that entered the end of 2025 on solid footing, while showing signs of gradual cooling in the labor market.
For mortgage rates and housing:
Strong GDP growth supports economic stability.
Slower hiring and elevated continuing claims may reduce inflation pressures.
Markets will continue watching how these trends influence future Federal Reserve decisions.
As always, headlines alone don’t tell the full story. Understanding the details behind the data helps buyers, sellers, and homeowners make more informed decisions in a changing market.
If you’re planning a move in 2026 or simply want to understand how economic trends may affect your mortgage options, staying informed is the first step.
