December jobs figures continue to support lower mortgage rates

Below is the breakdown of the vacancy details.

The unemployment rate fell in this report, but the bond market didn’t think much about it because the jobs report missed estimates and we got negative revisions.

Home Construction Jobs: Major Negative Revisions

I always take into account revisions to labor data, and the jobs report showed that this key sector of my economic work, housing construction jobs, which had recovered to new cycle highs in labor, is now on a clear downward trend. As you can see in the chart below, this is a labor trigger that happens before a recession. We will see if this trend continues as mortgage rates are now lower and builder confidence has improved.

Below are the latest homebuilder confidence figures, which show a modest recovery before the latest rate cut. It will be interesting to see where this stands in two months, when we will have lower rates in the system and we may have more demand incentives for the builders.

We also got the recent home construction numbers on Friday, and they showed an increase in home permits from recent lows. This can be attributed to the lower mortgage rates we saw in the second half of 2025.

Unemployment benefit data is still low

Since the end of 2022, I’ve been warning people not to talk about a recession until unemployment claims data heads toward 323,000 at the four-week moving average. In this week’s unemployment claims report, the headline figure is still low: we’re not seeing many hirings or layoffs.

Conclusion

This jobs report did not stir the bond market as we saw little movement in 10-year yields. Furthermore, every 2026 jobs report comes closer and closer to the day that Jerome Powell leaves his position as Fed chairman. In fact, we should get a lot of news about the Fed and housing policy soon, so the market will adjust to that news.

For me, labor is still the key to mortgage interest rates. This is why the unemployment benefits data and the unemployment rate will be two very important data lines in 2026 as we have already had a few rate cuts in the system and we are getting closer to the end of the rate cut cycle as long as the labor market doesn’t break down. Mortgage rates moved closer to the lower end of the 2026 housing forecast of 5.75% and we ended the week at 6.06%.