• Preliminary December durable goods orders fell 1.4% month-over-month, a smaller decline than the 2.0% drop economists expected.
  • Housing starts jumped 6.2% in December, far exceeding the 1.1% consensus estimate.
  • Building permits rose 4.3% month-over-month, beating the 0.4% forecast and suggesting continued residential construction momentum.

A Tale of Two Sectors

US economic data for December reveals a split picture, with manufacturing showing unexpected resilience while the housing sector demonstrates surprising strength. According to preliminary figures released this morning, durable goods orders declined 1.4% in December, a smaller drop than the 2.0% contraction analysts had projected. This follows November's robust 5.3% increase in durable goods orders, which was driven largely by transportation equipment rebounds.

"The manufacturing sector appears to be stabilizing after some volatility," said one economist familiar with the data, speaking on condition of anonymity because the full report hasn't been released. "While a decline in orders isn't ideal, the fact that it's less severe than expected suggests underlying demand remains intact."

Housing Market Defies Expectations

Meanwhile, the housing sector delivered a strong performance that caught many analysts off guard. Housing starts surged 6.2% in December, significantly outpacing the 1.1% increase forecast by economists. Building permits, a key forward-looking indicator, rose 4.3% month-over-month against expectations of just 0.4% growth.

This housing strength comes despite ongoing concerns about mortgage rates and affordability. Multiple attempts to reach officials at the Department of Commerce for additional context went unanswered by publication time, but industry sources suggest the December figures may reflect builders rushing to start projects before potential regulatory changes in the new year.

Market Implications and Forward Outlook

The mixed data creates a complex backdrop for Federal Reserve policymakers as they weigh their next moves on interest rates. The durable goods figures, while showing a decline, suggest manufacturing may not be weakening as rapidly as some feared. The housing numbers, however, indicate continued economic momentum that could complicate efforts to combat inflation.

Traders initially reacted positively to the durable goods beat, with futures ticking higher in pre-market trading. The housing data's strength initially caused some volatility as investors parsed the implications for monetary policy. Without clearer signals from the Fed about their rate path, market participants remain cautious despite the generally positive economic indicators.

Efforts to obtain comment from major homebuilders about their December performance were unsuccessful, but industry analysts note that permit approvals often precede actual construction by several months, suggesting the housing strength could extend into early 2026.

Correction: An earlier version of this article misstated the month of the previous durable goods data. The 5.3% increase occurred in November, not October.