Experts say the fourth quarter is the economy’s temperature check, but it behaves more like a lie detector test. Q4 holiday spending is less influenced by outside forces, revealing how consumers perceive their personal finances. So many of us are willing (and guilty) of opening our wallets a bit too widely because “it’s Christmas.” We cover our eyes, whip out the plastic, and cross our fingers that we can pay the bills off on time.
With rising costs on nearly everything, Americans are feeling a massive pinch. But what does the Q4-2025 spending mean for the 2026 housing market? If consumers are forced to save their pennies in December, will they feel bold enough to buy a new home six months later?
Holiday spending patterns often mirror broader economic pressures — including wage growth, inflation, and borrowing costs — which directly shape homebuyer readiness. When households pull back, it often signals concerns that go beyond seasonal shopping and into long-term financial planning.
Holiday Spending as a Window Into 2026’s Forecast
How did we come to use holiday spending as a forecast for next year’s economic outlook? David Weisselberger, an expungement attorney and founding partner at Erase the Case, explains:
“Economists view holiday spending as a good indicator of how much households are willing to spend beyond their incomes and use of credit on discretionary items, often as an early sign of willingness to take on the financial commitment of a larger item such as a house,” Weisselberger said.
Housing economists echo this sentiment and view discretionary spending as a proxy for consumer confidence.
“Holiday 2025 appears to be off to a strong start in dollar terms, with projected holiday sales of over $1 trillion and growth rates of nearly 4%. However, surveys indicate that confidence is decreasing along with planned reductions of between 5% and 10% in ‘real’ terms, particularly by lower- and middle-income consumers who appear to be ‘trading down,’ purchasing less, and shopping for deals.”
NewHomeSource data shows strong discretionary spending throughout 2025. But it appears many consumers are charging those purchases to credit, leading to expanding debt loads. According to Transunion, the average credit card debt per American in September 2025 was $6,523. That’s up $143 from $6,380 in September 2024.
Meanwhile, the average credit card interest rate on accounts with balances assessed interest was 22.83% in August 2025, according to the most recent data from the Federal Reserve.
“There’s also a psychological battle at play,” said Eric Croak, president at Croak Capital. “Many consumers want to believe things are fine (or at least appear that way) until they check their statements and discover they can’t keep up. That tension alone could translate into weaker Q4 retail results, which in turn could foreshadow soft or anemic homebuyer activity in early 2026.
“My gut tells me Q4-2025 will let us know what spring 2026 will bring in terms of housing market activity. Credit card balances, high and stagnating incomes, and all-time low credit limits suggest we’re in for a bumpy ride.”
The Evolution of Holiday Debt
Over the last few years, holiday debt has shifted from a “maxed out and paid off” pattern to a “charged and carried indefinitely” one. In 2003, a family might have spent $1,000 during the holidays and paid it off by March or April. Today, it’s more like several thousand dollars, and that money that lingers on a card through year-end with a brutal interest rate.
Meanwhile, incomes are taking longer to rebound to pre-pandemic levels. Younger buyers appear increasingly comfortable carrying debt forward while pursuing costly life goals. The result: credit fatigue that could easily outpace wage growth in 2025, setting up a drag on first-quarter confidence.
“Prior generations typically relied upon layaways and were able to pay off holiday balances within a couple of months, whereas today's younger adults tend to roll-over their revolving credit card balances and those associated with ‘buy-now-pay-later’ plans through each successive season,” Weisselberger said. “These larger balances reduce the amount of money ($400-$700/month) required to support a starter mortgage in 2026.”
To put this into perspective: Every additional $100/month in revolving debt payments can reduce borrowing power by roughly $10,000–$15,000, depending on the lender. For many would-be buyers, that lost buying power represents an entire price tier — or the difference between qualifying for a new home or needing to wait.
How Delays Could Cost New Home Buyers
Everyone loves to see presents under the tree, but overdoing the discretionary spending during the best season to buy a new home could cost shoppers more in the long run.
Purchasing a new home in December can come with a wealth of benefits. Builders looking to close out their books are willing to offer incentives ranging from cash savings to elaborate upgrade packages for finishes, floors, appliances, and more.
The first three months of the year can also be a great time to shop. People are still hesitant to venture out into the cold weather for touring, and builders are seeking to start the new year with strong sales.
Compare this with spring and summer, which mark the high season for shoppers. More new home buyers are out searching the neighborhoods, and builders are less inclined to offer large discounts or significant incentive packages during this part of the year.
In short, waiting for “the perfect time” to buy make cost you more in the end.
What Buyers Should Do Now
• Track holiday spending closely and avoid carrying new balances into 2026.
• Pay down existing credit card debt to improve borrowing power.
• Rebuild or increase personal savings to offset high-interest rate environments.
• Review credit limits and credit scores before beginning the home search.
• Set a realistic homebuying timeline based on finances and not optimistic sentiment.
• Consider postponing large discretionary purchases if homeownership is a priority.
• Monitor early 2025–2026 economic signals for changes in confidence and affordability.
The Bottom Line
Holiday spending isn’t just a year-end habit. If consumers limp out of December weighed down by high-interest debt, that strain is likely to show up as hesitation, delays, or reduced buying power when the 2026 housing market comes into focus. Higher-income buyers may feel less pressure, but for many households, Q4 spending patterns offer a clear signal: the stronger or weaker the holiday season, the more likely those trends will echo in early 2026 homebuying behavior.
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