Real Impact: What the December 2025 Jobs Report Means for Rental Housing

Real Impact by Chandan Economics explores how cornerstone data releases influence interest rate forecasts and reshape the rental housing sector's outlook.

Last Updated: January 9th, 2026

What Happened: According to the Bureau of Labor Statistics (BLS), total nonfarm payrolls rose by 50,000 during December, a tepid pace of hiring that caps a year of gradual deterioration for the US labor market.

US employers added 584,000 jobs in 2025, significantly below the 2 million added in 2024. Moreover, hiring totals for October and November were revised down by a combined 75,000 jobs, indicating that the labor market has been slowing more sharply than previously thought.

Both the unemployment rate and the number of unemployed people were little changed in December, at 4.4% and 7.5 million, respectively.

What It Means for Interest Rates: Despite the job market's relative underperformance, futures markets indicate a low likelihood of a January rate cut. According to the Chicago Mercantile Exchange's Fed Watch Tool, futures markets grew more hawkish following the employment update. There is now a 95.0% probability of no rate change at the January policy meeting compared to an 88.9% probability of no rate change one day prior.

What It Means for Rental Housing: For owners and operators who anticipated an accelerated pace of rate cuts in 2026, futures projections and a growing split among FOMC officials appear to suggest otherwise. While some on the committee have increasingly advocated a less restrictive stance given the softening job market, others worry about the persistence of above-target inflation and the risk of exacerbating it.

The modest hawkish reaction by the Fed Funds futures market following the December job release can be explained by the virtually unchanged unemployment rate, which is likely to keep policymakers restrained from cutting again in the immediate term.

One of the more measurable impacts of the restrictive environment on housing has been the mortgage "lock-in effect", where owners who purchased or refinanced a home during the low-rate days of the pandemic are dissuaded from further mobility while rates remain high.

Although its impact on rental housing is indirect, both high mortgage rates and reduced mobility in the purchase market leave less inventory for renters looking to transition to homeownership. The result is a net-positive effect on rental demand.

The January 13th release of the December 2025 Consumer Price Index (CPI) data serves as the next key indicator for markets and policymakers and could further shift the balance of risks to the Fed's mandate. However, the release of the Federal Reserve's preferred gauge of inflation, the PCE deflator, has been delayed until February, keeping the Fed a bit in the fog as the January policy meeting approaches.