Real GDP expanded by a seasonally adjusted annualized rate of 4.3% during the third quarter of 2025, according to the latest estimate from the Bureau of Economic Analysis.
Growth was well above the 3.3% consensus estimate, propelled by expanded consumer and government spending. Consumer spending grew at a 3.5% annual pace, contributing about 55% of total output for the quarter. Outlays on healthcare, recreation, and non-durable goods drove the increase in consumer spending.
A shift in trade dynamics was also a key contributor to the faster-than-expected growth in Q3. Exports jumped by an annualized 8.8% rate while imports, which are subtracted from the GDP calculation, declined by 4.7%.
Government outlays also outpaced estimates, rising at an annualized rate of 2.2%, driven primarily by a 5.8% increase in national defense spending.
Meanwhile, business investment grew more tepidly, decelerating to 2.8% in Q3 and contributing a drag on overall economic output. AI investment and cap-ex spending on information processing equipment were robust during the period, but high borrowing costs and labor headwinds tempered spending on structures and residential investment.
2. NOVEMBER JOBS REPORT
According to the latest data from the BLS, nonfarm payrolls were little changed in November, with employers adding just 64,000 jobs. It follows an October decline of 101,000 payrolls.
The headline unemployment rate rose from 4.4% in September to 4.6% in November. Meanwhile, average hourly earnings rose to $36.86, up 3.5% from November 2024.
The most notable job increases were in health care (+46,000) and construction (+28,000), while declines were seen in federal government positions (-6,000) and transportation and warehousing (-18,000).
US employment levels have barely changed since April, while a deeper analysis of the data shows that the number of people employed part-time for economic reasons has increased by 119,000 since September.
3. CPI INFLATION
According to the Bureau of Labor Statistics, the US Consumer Price Index (CPI) decelerated to 2.7% year-over-year in November from 3.0% in September.
Due to the recent government shutdown, October data was not calculated. As a result, no month-over-month inflation measurements were made for November.
Core-CPI, which excludes food and energy components, rose 2.6% year-over-year, its slowest pace since March 2021.
The shelter index of CPI, which has been a key contributor to the post-pandemic inflation rise, cooled to 3.0% year-over-year in December.
Food prices also decelerated from 3.1% in September to 2.6% in the latest reading. The “food at home” component rose 1.9% annually while the “food away from home” segment rose 3.7%.
Meanwhile, energy prices rose sharply from September, climbing from 2.5% year-over-year to 4.2% year-over-year in December.
4. COMMERCIAL PROPERTY PRICES
According to the latest MSCI-RCA Commercial Property Price Index, US commercial real estate prices were flat month-over-month but are up 1.6% over the previous twelve months through November.
Overall deal volume during November was down compared to the same month one year ago, however, year-to-date volume has already exceeded 2024’s total.
Industrial properties have experienced the strongest pace of price growth over both the past month and the previous year, climbing 0.5% from October and 5.1% over the past twelve months.
Suburban office properties continue their 2025 recovery, rising 0.3% from October and up 2.7% year-over-year. CBD office prices continue to lag the suburban segment, with transaction prices down 0.7% from October and down 1.9% over the past twelve months.
Retail prices are down 0.1% from October but remain 2.4% above the November 2024 level.
Apartment properties continue to experience price corrections, falling 0.2% from October and down 1.4% year-over-year.
5. RETAIL RESILIENCY
Despite retail sales being flat month over month between September and October of 2025, a deeper analysis of trends suggests the retail market is chugging along with strong momentum, with important implications for property values in the sector.
Year-over-year sales rose 3.8% in October, while core retail sales, which exclude automobile, gasoline, and food services, are up 4.5%.
Other signs of underlying strength in the sector include rising household net worth, wages that have outpaced inflation over the past 30 months, and relatively low unemployment.
As a result of these strong fundamentals, a TD Cowen study suggests holiday sales growth could be up to 5% higher this year than in 2024.
6. NATIONAL INDUSTRIAL PERFORMANCE
According to the latest CommercialEdge National Industrial Report, the average rent on Industrial properties rose by just 1 cent from October but is up 5.7% year-over-year to $8.76 per square foot as of November 2025.
The national vacancy rate stands at 9.75%, rising 220 basis points over the past twelve months as new supply has outpaced demand throughout 2025.
Sales volume has reached $68.4 billion year-to-date, and 2025 is poised to be the strongest year for transactions (in dollar-value terms) since 2022.
As of the end of November, there were 382.7 million square feet of industrial space under construction across the United States. Year-to-date completions total 265.7 million square feet.
Regionally, the Midwest remains the most affordable region for sector investment, led by Cleveland, which has the lowest nationwide rate among major markets at $56 per square foot.
Dallas-Fort Worth leads the way in year-to-date sales volume at roughly $5.6 billion. Meanwhile, markets in Southern California, such as Los Angeles and the Inland Empire, experienced stagnating or declining prices in 2025.
7. OFFICE MARKET STABILIZATION
The US Office market has shown signs of stabilization in 2025, as construction activity slowed to historic lows, allowing for some modest price gains and expanding utilization rates.
Just over 12 million square feet of office development has been started through November, roughly on par with last year. Planned developments or those in process amount to 1.7% of total stock, down from 3.0% in 2024.
The restrained development pipeline has coincided with a modest reduction in office vacancy, which has fallen to 18.5% through November. Among the top 25 markets, 16 saw vacancy rates decline in 2025.
Physical occupancy remains flat, but some major markets, like Manhattan, have seen occupancy recover even as their supply pipeline grows.
Further, for the first time since 2022, the average national asking price per square foot rose, signaling a critical inflection point for the sector.
Growth in coworking remains an essential driver of sector expansion. According to Yardi Matrix, 22 million square feet of coworking space opened in 2025, a 16% increase over last year.
8. NATIONAL RENT COLLECTIONS
On-time rental payments in independently operated apartment units rose by 73 basis points (bps) in December to 83.7%, according to the latest national rent collections data from Chandan Economics-Rent Redi.
While on-time rent collections remain well below post-pandemic highs, they have been trending positively since August. However, measured on a year-over-year basis, on-time rates have declined for 29 consecutive months.
Late payments have been the primary driver of underperformance in the mom-and-pop rental sector this year, with the rate remaining above 10% throughout 2025.
Despite weaker on-time performance, full-payment rates have remained resilient in 2025, averaging 96.0% for the year — outperforming the 2024 average.
Western states continue to post the strongest on-time payment rates nationally, led by South Dakota, Utah, and Alaska, while New Hampshire remains a top-performing East Coast standout.
2–4-family rental properties once again led all property types in December, posting the highest on-time payment rate at 84.2%.
9. HOMEBUILDER SENTIMENT
Homebuilder sentiment ticked up slightly in December but remained in contraction, according to the latest measure of the NAHB/Wells Fargo Housing Market Index.
The index, where a reading below 50 indicates that more builders view conditions as poor than good, rose from 38 to 39 during the month.
The current sales conditions portion of the index increased by 1 point to 42, while the index of future sales expectations rose by 1 point to 52.
Notably, future expectations have registered above the breakeven threshold (50) for three consecutive months. However, prospective buyer traffic was unchanged at 26.
The share of builders offering sales incentives reached 67% in December, its highest level during the post-pandemic period. 40% of builders lowered prices at sale, with the average reduction being 5%.
Cost headwinds, including high material and labor prices, alongside regulatory and economic headwinds, continue to afflict homebuilder activity.
10. EXISTING HOME SALES
According to the National Association of Realtors (NAR), existing home sales rose in November for the third consecutive month, rising 0.5% in October to a seasonally adjusted annual rate of 4.13 million. It’s the highest sales pace in nine months.
The median sale price rose 1.2% year-over-year to $409,200 in November, marking the 29th consecutive month of annual price gains.
Meanwhile, housing inventory fell 5.9% from October to 1.43 million units. The total months’ supply of existing inventory is down from 4.4 months in October to 4.2 months in the latest reading.
The average number of days that homes stayed on the market rose from 34 days in October to 36 in November.
According to the report, sales were bolstered during the month by lower mortgage rates, but first-time buyers accounted for a smaller share of sales—down to 30% in November from 32% the previous month.
2025
