Gaming Out Potential Housing Plays Against a Murky 2026 Jobs Market
Uncertainty over the economy is leading CEOs to keep a tight rein on hiring next year. But depending on how things play out, there could be opportunities.
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Last week, we talked about how we would keep the Pro Portfolio’s eyes and ears open for potential opportunities next year in the commercial aerospace sector, as well as on developments on the robotaxi and autonomous driving front, given interests at a few of our holdings.
Additionally, we are keeping a watchful eye on the housing market, which also means tracking the jobs market and interest rates. The reason is that, as much as folks like to focus on interest and mortgage rates, other key factors, according to the Joint Center for Housing of Harvard University, include a robust labor market, rising incomes, and moderate inflation.
Looking at the recent data, none of those three areas are currently favorable to housing. While we are likely to see further improvement on the inflation front as we anniversary tariffs or other trade deals are completed, the outlook for the jobs market is painting a different picture. In the weekend edition of The Wall Street Journal, an article on corporate hiring plans for 2026 indicated there wasn’t much to look forward to.
The article cited a recent CEO gathering held by the Yale School of Management at which 66% of the leaders surveyed said they planned “to either fire workers or maintain the size of their existing teams next year. Only a third indicated they planned to hire.”
Not exactly promising.
The article went on to say the following:
Economists at Indeed recently updated hiring scenarios for the year ahead, expecting more of the same. Analyzing job openings along with estimates for economic growth, they now predict the unemployment rate to hover around 4.6% in 2026. “We’re not expecting things to change a whole lot in 2026.”
Tying both of those findings together is the general sense of concern and uncertainty about the economy. While we may look at current GDP expectations from models such as the Atlanta Fed’s GDPNow, which guesstimates a 3.0% figure for Q4 2025, the range of GDP expectations for 2026 spans from 1.9% at Deloitte to 2.4% at Bank of America (BAC) and 2.6% at Goldman Sachs (GS) .
Some of the levers between those figures include the impact of tax-law changes and business investment, tariff de-escalation, inflation, and consumer spending. Odds are it won’t be until we are partly into 2026 that we’ll get a real feel for the economy’s prospects. That argues that until the economic picture comes into focus, corporate America is likely to throttle back hiring.
One other thing to mention is the Unemployment Rate, which hit 4.6% in November, a figure above the Fed’s 4.5% set of economic projections for this year and next. Should we see the reported Unemployment Rate remain at that 4.6% level or tick higher, and inflation improve, we could see the Fed become incrementally dovish in the coming months. There is also the likelihood that President Trump will appoint a Fed Chair who is more like-minded with the president on where the Fed funds rate should be. As in “much lower.”
That could stimulate some demand in the housing market, but how much of that will be for new homes over refinancing activity is something we’ll want to closely follow. Lower rates without a pick-up in job creation isn’t a formula for a rip-roaring housing market for public builders such as D.R. Horton (DHI) , Lennar (LEN) , PulteGroup (PHG) , and others.
Lower rates would translate into lower borrowing costs, and if consumers are feeling better about the economy, that could lead to a pick-up in repair & remodel activity. Key players in that arena include Masco (MAS) , Sherwin-Williams (SHW) , Trex (TREX) , and Armstrong World (AWI) , as well as Home Depot (HD) and Lowe’s (LOW) .
At the time of publication, TheStreet Pro Portfolio had no positions in any securities mentioned.
