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A 2026 economic outlook with real estate implications for Puget Sound
Moody’s Analytics started 2026 by comparing their 2025 forecasts to early results. Their team says they were very close on jobs and GDP. However, they were less accurate on the stock market. Home prices also ran stronger than expected on the FHFA index.
What their 2026 baseline suggests
Their baseline is steady growth that is closer to potential. Therefore, the economy may look stable on the surface. However, they still expect a softer labor market early in the year. In addition, they see tariffs continuing to influence inflation. They also think more businesses may pass tariff costs to consumers in 2026.
Why AI is still the wildcard
They describe AI as both a tailwind and an unknown. In 2025, they argue AI helped through infrastructure buildout and stock-wealth effects. Consequently, consumer spending may have benefited from stronger asset values. In 2026, they expect the story to shift toward productivity. Still, the timing is unclear. If productivity rises quickly, job disruption could increase. If it rises gradually, the economy may absorb the change more smoothly.
Puget Sound housing: what to watch
For buyers and sellers in King, Pierce, and Snohomish counties, the key variables remain jobs, rates, and inflation. If inflation stays sticky, mortgage rates can remain elevated. That can constrain affordability. As a result, pricing may depend more on inventory and local job trends than on broad national headlines.
The takeaway
Moody’s team assigns meaningful probability to downside scenarios. Those risks include inflation surprises, market volatility, and policy uncertainty. Even so, their baseline still points to continued growth.
If you want help translating economic headlines into a local housing plan, follow or DM me with your Puget Sound real estate questions.
Link to podcast: https://youtu.be/3u2s9clzJlE?si=FnwovfaLluJ1FRiR
