Easing interest rates are providing some relief for U.S. consumers heading into 2026, but early data suggests rate cuts alone may not be enough to lift vehicle demand if spending continues to soften.
That is according to Cox Automotive’s Auto Market Weekly Summary published this week, in which Cox pointed to a holiday-shortened week with limited economic releases, but largely positive updates on housing and jobless claims in the United States.
Pending home sales rose 2.6 per cent year over year through November, including a 3.3 per cent monthly gain, according to the National Association of Realtors. Cox noted the South led year-over-year gains, while the West posted the strongest month-over-month growth at 9.2 per cent, marking the best seasonally adjusted reading of the year and the strongest performance in nearly three years.
Jobless claims continued to trend lower, falling to 199,000 in the final week of December — nearly five per cent below last year. Continuing claims also declined on the week, though remained 2.1 per cent above year-ago levels.
Cox said consumer sentiment rose again in December but remains down three per cent from a year earlier, based on Morning Consult’s daily tracker. At the same time, Bloomberg data showed a fifth straight week of year-over-year declines in consumer spending.
Interest rates fell through December following a Federal Reserve rate cut. Cox said new-vehicle APRs declined 13 basis points and used rates fell 25 basis points, bringing both to their lowest levels in a year. Despite that, Cox said new retail sales in December were averaging four per cent lower year over year, while used retail sales were down about one per cent through the third week of December. Both improved week over week late in the month.
Improving sentiment won’t help if shoppers keep delaying purchases. Staying sharp on payments, affordability messaging and used sourcing may be key for American dealers as the market heads into tax refund season.
