As we kick off 2026, the latest economic data shows two important trends taking shape: the labor market continues to cool, and new home construction slowed toward the end of last year. For buyers and homeowners in Mukilteo, Edmonds, and Bothell, these shifts help explain what’s happening with mortgage rates, inventory, and affordability.
Here’s a breakdown of the key developments and what they could mean locally.
The Bureau of Labor Statistics reported that 50,000 jobs were added in December, falling short of the expected 73,000. The unemployment rate edged down slightly from 4.5% to 4.4%, but the headline numbers don’t tell the full story.
Revisions played a major role. Payroll figures for October and November were revised lower by a combined 76,000 jobs, and previous unemployment data was also adjusted higher in several months last year. These revisions suggest the labor market has been weaker than initially reported.
When looking at where jobs were added, most gains came from:
Health care and social assistance (+39,000 jobs)
Leisure and hospitality (+47,000 jobs)
Health care tends to be stable regardless of economic conditions, and leisure and hospitality often see seasonal hiring in December. Outside of these areas, overall job growth would have been negative.
Bottom line:
The labor market is losing momentum, even if the headline numbers don’t immediately show it.
According to ADP, the private sector added 41,000 jobs in December after losing 29,000 in November. While that’s an improvement, it still came in below expectations.
Breaking it down:
Small businesses added 9,000 jobs
Medium-sized companies led the way with 34,000 jobs
Large employers added just 2,000 jobs
Hiring remained uneven across industries. Education and health services posted the strongest gains, followed by leisure and hospitality—again likely reflecting seasonal patterns.
Wage growth continues to favor job switchers, with pay increasing 6.6% year over year, compared to 4.4% for workers who stayed in the same role.
Bottom line:
Hiring picked up slightly in December, but the broader trend remains weak. Over the last five months, private payrolls have grown by only 27,000 jobs, pointing to a clear slowdown.
Other labor indicators reinforce the same message:
Initial jobless claims rose to 208,000
Continuing claims increased to 1.914 million and have stayed elevated for much of the past year
Job openings dropped to 7.15 million in November
Hiring and quit rates remain low, signaling reduced confidence among both employers and workers
While job cut announcements in December were the lowest in over a year, total job cuts for all of 2025 reached 1.2 million, one of the highest totals on record. Hiring announcements were also at their lowest level since 2010.
Bottom line:
Layoffs aren’t surging, but hiring is clearly slowing—a “low-fire, low-hire” environment that often influences Federal Reserve policy and mortgage rate direction.
Delayed government data showed Housing Starts fell 4.6% from September to October, reaching their lowest level since the early days of the pandemic. Building Permits, a key indicator of future construction, also slipped slightly.
For buyers in Mukilteo, where buildable land is limited, and in Edmonds and Bothell, where demand remains strong, this slowdown matters.
Bottom line:
The housing market still needs more inventory, but adding supply takes time. Builders must move through permitting, construction, and completion before homes reach the market. If mortgage rates ease further, demand could rebound faster than supply—putting pressure on prices again.
Several important reports are ahead:
Consumer inflation and new home sales (Tuesday)
Wholesale inflation, existing home sales, and retail sales (Wednesday)
Jobless claims (Thursday)
These updates will help shape expectations around inflation, housing demand, and interest rates.
Mortgage bonds rallied late last week following an announcement that Fannie Mae and Freddie Mac would purchase $200 billion in mortgage-backed securities. That move helped establish a new trading range, with support near 100.12 and resistance around 100.84.
Meanwhile, the 10-year Treasury yield remains rangebound, supported near its 25-day moving average and facing resistance around the 4.20% level. These technical levels matter because bond movement plays a major role in day-to-day mortgage rate changes.
Here’s the local takeaway:
Job growth is slowing, which can support easier monetary policy
New home construction has cooled, limiting future inventory
Demand remains steady in desirable communities
Mortgage rates may improve if economic softness continues
If you’re planning to buy or refinance in Mukilteo, Edmonds, or Bothell, preparation is key. When inventory is tight, buyers who are pre-approved and informed have a major advantage.
At Home Right Lending, we’re a mortgage brokerage—not a bank. We work with multiple lenders to help you find the right loan for your situation, whether you’re buying, refinancing, or navigating complex income.
If you’re exploring options in Mukilteo, Edmonds, or Bothell, reach out today. We’ll help you understand your choices and get positioned before the market shifts again.