Like many of you, I watched the State of the Union address this past Tuesday. I kept hearing how the current administration inherited “the worst economy in the history of the United States” and how 2025 marked a major turnaround.
But as someone who owns several businesses, including a robust real estate portfolio, I can say with all confidence that is simply not true. I’ve learned not to take political rhetoric at face value.
So, I decided to cut through the politics and research the numbers myself. Think of it like a home inspection before you buy — you don’t take the seller’s word for the condition of the roof. You hire a professional to go up and look.
Here’s what I discovered — and more importantly, what it means for residential real estate in 2026.
What the data really says: 2024 vs. 2025
GDP growth
Let’s start with GDP growth. According to the U.S. Bureau of Economic Analysis, the economy grew at 2.8 percent in 2024. In 2025, that slowed to 2.2 percent — dragged down significantly by a weak fourth quarter that came in at just 1.4 percent, partly due to the effects of the October–November government shutdown.
Winner: 2024
Jobs
What about job growth? According to the Bureau of Labor Statistics, the economy added roughly 2.2 million jobs in 2024. In 2025, after recent benchmark revisions, total nonfarm payroll growth came in at just 181,000 for the entire year — an average of roughly 15,000 jobs per month. That’s not a typo. Job creation fell off a cliff.
Winner: 2024, by a landslide
Unemployment
Now let’s look at unemployment. The annual average unemployment rate in 2024 was 4.0 percent. In 2025, that rate climbed, ranging from 4.2 to as high as 4.5 percent, with an annual average closer to 4.3 percent.
Winner: 2024
Inflation
Finally, inflation. According to the Consumer Price Index, consumer prices rose 2.9 percent from December 2023 to December 2024. From December 2024 to December 2025, that figure came down to 2.7 percent. Not a dramatic improvement, but a step in the right direction.
Winner: 2025
Bottom line: 2024 was not “the worst economy in the history of the U.S.” As a matter of fact, three out of four data points show that 2025 is actually worse, and everything points to us being in a downward trajectory, not upward. But hey, I don’t have to tell you this; you have probably felt it, too.
Why does this matter to you as a real estate professional? Because data doesn’t lie, and when you’re talking with clients about how the economy impacts real estate, spreading incorrect information will only make you look uninformed and erode the trust you’ve worked hard to build.
How a sluggish economy impacted housing
Despite steady (though slowing) economic growth, residential real estate struggled with transaction volume. According to the National Association of Realtors, existing-home sales totaled 4.06 million in 2024 and 4.06 million in 2025 — essentially identical and the lowest annual totals since 1995. We’re talking about a 30-year low.
Why? Two forces collided. Buyers were constrained by affordability — home prices remained at or near record highs while mortgage rates hovered above 6 percent. Meanwhile, sellers were constrained by rate lock-in. When homeowners sitting on 3 percent mortgages consider trading up into 6-plus percent financing, most choose not to move. That limits inventory.
Interestingly, prices did not collapse. Home price growth slowed significantly in 2025, rising in the low single digits year-over-year. Weak demand was matched by weak supply, and that equilibrium prevented a crash. Think of it like a seesaw perfectly balanced — neither side is winning, but neither side is falling either.
The 2026 outlook: Recalibration, not rebound
Most major housing economists expect 2026 to improve modestly over 2025 — but not dramatically. The National Association of Realtors has projected existing-home sales rising approximately 14 percent in 2026 compared to 2025 levels, with mortgage rates projected to average around 6 percent. Home prices are forecast to increase around 4 percent, supported by steady demand and persistent supply shortages.
The common theme: 2026 is expected to be better than 2025, but not a return to frenzy. We are not in a boom cycle. We are not in a crash cycle. We are in a recalibration cycle.
What this means on the ground
Expect well-priced homes to move and overpriced homes to linger. Negotiations will normalize. Concessions will reappear. Inspections will matter again. Inventory is improving gradually, but still below levels associated with oversupply. Affordability remains the defining constraint. The market is no longer forgiving — it is selective.
What real estate professionals should do now
In this type of market, survival belongs to skilled professionals — not passengers.
- Re-master pricing conversations: Precision pricing wins in a flat-to-slow appreciation environment. Use absorption rates, days on market and current buyer behavior — not outdated comparables.
- Elevate buyer education: Help buyers understand financing options, rate buydowns, payment scenarios and long-term equity benefits. Clarity builds confidence.
- Recommit to consistent prospecting: Low-volume markets reward agents who create conversations daily. Inventory is generated through relationships, not luck.
- Strengthen negotiation skills: Credits, contingencies and inspections are back. Agents must be skilled, not just responsive.
- Operate with financial discipline: Evaluate marketing ROI. Protect margins. Focus on conversion over vanity metrics.
The bottom line
After reviewing the actual economic data, the narrative of a false 2024 collapse, followed by a dramatic turnaround, “mission accomplished” 2025 boom, does not align with the truth.
- GDP growth slowed from 2024 to 2025.
- Job creation cratered.
- Housing sales remained at 30-year lows across both years.
- Prices slowed but did not collapse.
And 2026 looks poised for modest improvement — not explosive recovery.
This is not an easy market. It is a professional market. And in a recalibrated environment, skill — not slogans — becomes the competitive advantage. Plan for the worst. Hope for the best. And let the data guide the way.
Darryl Davis is the CEO of Darryl Davis Seminars. Connect with him on Facebook or YouTube.
