After months of delayed data tied to last fall’s government shutdown, we finally have updated reports on inflation, housing activity, construction trends, and overall economic growth. For buyers and homeowners in Woodinville, Mount Vernon, and Mukilteo, these updates help clarify what could happen next with mortgage rates and local housing activity as we head toward spring.
Here’s what stands out.
The December Personal Consumption Expenditures (PCE) report — the Federal Reserve’s preferred inflation measure — showed prices running slightly hotter than expected.
Headline inflation: up 0.4% for the month, 2.9% year-over-year
Core inflation (excluding food and energy): up 0.4% monthly, 3% annually
One interesting contributor? A nearly 20% spike in video streaming subscription costs, which added to the monthly increase.
What this means locally:
Inflation is still above the Fed’s 2% target, which supports a cautious stance on future rate cuts. However, signs of a cooling labor market create competing pressure for policy flexibility.
For buyers in Woodinville, where move-up homes are common, and in Mukilteo, where limited inventory can create competition quickly, inflation trends matter because they influence the direction of mortgage rates over time.
There is some potential good news ahead. Higher inflation readings from early 2025 will soon drop out of the 12-month comparison. If upcoming monthly numbers remain moderate, annual inflation could begin trending lower again.
Pending Home Sales — which track signed contracts on existing homes — slipped 0.8% from December to January and were down 0.4% from a year ago.
Winter storms likely disrupted activity in several parts of the country, though other regions posted gains. Meanwhile, contracts on new homes had reached their strongest pace in nearly four years late last fall.
Local perspective:
Seasonal slowdowns are common this time of year. In markets like Mount Vernon, where affordability draws steady demand, and in Mukilteo and Woodinville, where buyers often act quickly when rates dip, activity could rebound as the weather improves and spring buying season begins.
Economists estimate that lower mortgage rates could bring hundreds of thousands of additional buyers into the market this year. The key variable? Supply. If listings don’t increase, renewed demand could place upward pressure on prices.
Housing construction showed modest improvement:
Housing Starts: up 6.2% month-over-month
Building Permits: up 4.3% month-over-month
Even so, both remain slightly below year-ago levels.
Builder confidence also remains subdued. The National Association of Home Builders’ index dipped to 36. Any reading below 50 indicates more builders view conditions as challenging than favorable.
Builders continue to cite affordability concerns and elevated construction costs as ongoing obstacles, even though somewhat lower mortgage rates have helped buyer sentiment.
What this means for Woodinville, Mount Vernon, and Mukilteo:
Supply remains limited. Even when construction picks up, it takes time for homes to move from permit approval to completion. That lag can keep inventory tight, particularly in desirable communities near water, wineries, or strong commuter corridors.
The first estimate of Q4 2025 GDP showed economic growth slowing to 1.4%, down from 4.4% in Q3. Much of that decline was attributed to reduced government spending during the shutdown.
On the employment side:
Initial jobless claims: fell to 206,000
Continuing claims: rose to 1.869 million
While layoffs remain relatively contained, elevated continuing claims suggest some workers are taking longer to find new jobs.
Bottom line:
The economy is cooling but not contracting sharply. That keeps the Federal Reserve in a balancing position between inflation control and employment support.
Several key reports are coming up:
Case-Shiller and FHFA Home Price Indexes
Weekly jobless claims
Producer Price Index (PPI) for wholesale inflation
These releases will help shape expectations for mortgage rate movement heading into the heart of the spring housing season.
Mortgage bonds ended last week near the upper end of their recent trading range, finding support at the 25-day moving average and facing resistance around the 100.38 level.
Meanwhile, the 10-year Treasury yield remains range-bound between roughly 4.05% and 4.13%. A move outside that range could influence mortgage rate trends in either direction.
Here’s the local takeaway:
Inflation remains slightly elevated but manageable
Seasonal weather likely contributed to slower contract activity
Construction has improved modestly but inventory is still tight
Economic growth has slowed, influencing rate expectations
If you’re considering buying or refinancing in Woodinville, Mount Vernon, or Mukilteo, preparation is key. When rates shift — even slightly — demand in these communities can move quickly.
At Home Right Lending, we’re a mortgage brokerage — not a bank. That means we work with multiple lenders to help you compare loan options and find a solution that fits your goals.
If you’re looking in Woodinville, Mount Vernon, or Mukilteo, reach out today. We’ll walk you through your options clearly and help you build a plan that works in today’s evolving market.