November 10, 2025 – The U.S. economy continues to navigate through uncertainty as the government shutdown lingers on. Despite elevated inflation, slowing job growth, and ongoing government challenges, consumer spending is expected to remain resilient. Holiday sales, in fact, are projected to surpass $1 trillion for the first time this year. However, underlying risks are surfacing with job cuts reaching levels last seen since 2003 and consumer credit risk becoming increasingly polarized. These dynamics are shaping the broader economic landscape, influencing everything from retail activity to housing affordability and development sentiment.

Moderating home prices help improve affordability in the third quarter: Housing affordability in California improved from both the previous quarter and the same quarter of last year. The statewide housing affordable index (HAI) for existing single-family homes increased two percentage points (ppt) from Q225 to 17% in Q325 and inched up from its year-ago level by one ppt. While the statewide median home price moderated in Q325 as market competition cooled and an improved housing supply environment led to softer price growth, borrowing costs remained near their all-time high despite mortgage rates easing further in the third quarter. The monthly mortgage payment for a median-priced home (including taxes and insurance) in California slipped 3.8% from Q225 but inched up by 1.3% from Q324, as the effective mortgage rate dipped quarter to quarter, but inched up from its year-ago level. A minimum annual income of $223,600 was required to make the monthly payment of $5,590 in Q325 in California. With the market transitioning into the off-season, home prices are expected to moderate further as seasonal factors kick in. If lower mortgage rates materialize in the months ahead and economic uncertainties subside, housing affordability could see slight improvement in the next couple of quarters.

Holiday sales in the U.S. expected to top $1 Trillion for the first time this year: Retail sales in November and December of 2025 are projected to grow between 3.7% and 4.2% from 2024, pushing holiday sales pass the $1 trillion benchmark for the first time, according to the National Retail Federation’s (NRF) annual holiday forecast. With the moderate increase from last year, total spending for the last two months of the year will fall between $1.01 trillion and $1.02 trillion. NRF’s latest holiday survey released separately predicted that consumers will spend $890.49 per person on average on holiday gifts, food, decorations and other seasonal items this year. This year’s figure is the second highest in the survey’s 23-year history, just 1.3% shy of last year’s record $901.99. Holiday shoppers remain concerned about tariffs, with 85% of them expecting higher prices because of tariffs. Inflation remaining elevated and the job market slowing down have kept Americans sentiment down in recent months, yet resiliency in consumer spending in the second half of the year so far should continue to provide support to the U.S. economy during the upcoming holiday season.

Job cuts reach highest October total since 2003: Employers in the U.S. cut 153,074 jobs in October, an increase of 175% from 55,597 cuts in October 2024 and a jump of 183% from the 54,064 cuts announced a month ago, according to a release from Challenger, Gray & Christmas, Inc. The total job cuts last month were the highest for an October since 2003 when 171,874 cuts were recorded. For the first ten months of 2025, companies have cut 1,099,500 jobs, a surge of 65% from 664,839 announced for the same time frame in 2024. The year-to-date cuts in 2025 are also the highest since 2020 when over two million job cuts were announced. District of Columbia (303,778) had the highest number of layoffs so far this year, followed by California (158,734), and New York (81,701). While the “DOGE” effect remains the leading reason for job cuts in the government sector in 2025, AI adoption, the softening in spending at both the consumer and the corporate levels, and the increase in firms’ operation costs are factors for the surge in layoffs in the private sector this year. With the government shutdown remaining in place as of November 9th, the labor market could stay soft for another month as we enter the holiday season.

Multifamily developer confidence improves from a year ago but remains flat from Q2: The National Association of Home Builders Multifamily Market Survey provides a mixed outlook for the industry with its latest Multifamily Market Survey results. The Multifamily Production Index in Q3 2025 climbed six points on a year-over-year basis to 46 but remained flat from Q2 2025. The jump from last year signaled improved sentiment from a year ago but pessimism remained as the confidence level stayed below the neutral threshold of 50. Optimism was strongest in low-rise rentals and subsidized units, but mid/high-rise and condominiums remained weak. The Multifamily Occupancy Index slipped one point from Q3 2024 to 74 and reached the lowest in nearly three years and was down eight points on a quarter-to-quarter basis. Developers continued to face challenges with rising construction costs, regulatory hurdles, and tight financing, despite seeing modest improvement in some segments. With economic uncertainty expected to remain in the next few months, persistent headwinds in high-density development could continue to temper construction activity and job growth in the near future.

Polarizing consumer credit risk could affect the housing market: According to TransUnion’s newly released Q3 2025 Credit Industry Insights Report, consumer credit risk is polarizing with the share of super prime borrowers rising to 40.9% in Q3 2025 from 37.1% in Q3 2019, while the share subprime borrowers had been steadily climbing to 14.4%, a return to pre-pandemic levels. Middle tiers, on the other hand, are shrinking, suggesting that some in this segment could be facing increasing financial strain in the last few years. For housing, this could translate into easier access for the highest-credit buyers but continued barriers for the prime or near-prime segments, limiting mid-level demand.

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