Based on the data, real estate is not in a boom cycle, writes Coach Darryl Davis. We are not in a crash cycle. It is in a reconditioning cycle.
Like many of you, I watched the State of the Union address last Tuesday. I kept hearing how the current administration inherited “the worst economy in American history” and how 2025 was a big turnaround.
But as someone who owns multiple businesses, including a solid real estate portfolio, I can confidently say that’s simply not true. I learned not to take political statements at face value.
So I decided to cut through the politics and investigate the numbers myself. Think of it like a pre-purchase home inspection. Never take the seller’s word for the condition of the roof. Hire an expert to visit the site and take a look.
Here’s what I discovered and, more importantly, what it means for residential real estate in 2026.
What the data really says: 2024 and 2025
GDP growth rate
First, let’s look at the GDP growth rate. According to the U.S. Bureau of Economic Analysis, the economic growth rate in 2024 was 2.8%. Although it slowed to 2.2% in 2025, the slump in the fourth quarter of only 1.4%, partly due to the impact of the government shutdown from October to November, was a major drag.
Winner: 2024
Recruitment
What about job growth? The economy added about 2.2 million jobs in 2024, according to the U.S. Bureau of Labor Statistics. In 2025, after recent index revisions, non-farm employment growth will be just 181,000 jobs per year. This equates to an average of approximately 15,000 jobs per month. That’s not a typo. Job creation has fallen off a cliff.
Winner: 2024, overwhelming victory
unemployment
Next, let’s look at the unemployment rate. The annual average unemployment rate in 2024 was 4.0%. In 2025, that percentage rose from 4.2 percent to a maximum of 4.5 percent, with an annual average closer to 4.3 percent.
Winner: 2024
inflation
Finally, there is inflation. According to the Consumer Price Index, consumer prices rose by 2.9% from December 2023 to December 2024, but fell to 2.7% from December 2024 to December 2025. It’s not a dramatic improvement, but it’s a step in the right direction.
Winner: 2025
Bottom line: 2024 wasn’t the “worst economy in U.S. history” In fact, three out of four data points show that 2025 will actually be even worse, all indicating that we’re on a downward trajectory rather than an upward trajectory. But hey, I don’t need to say this. You’ve probably felt it too.
As a real estate professional, why is this important? Data doesn’t lie, so spreading misinformation when you’re talking to your clients about how the economy is impacting real estate will only make you seem uninformed and undermine the trust you’ve worked so hard to build.
The impact of the economic downturn on housing
Despite steady (albeit slowing) economic growth, residential real estate was struggling with transaction volumes. According to the National Association of Realtors, the total number of existing homes sold will be 4.06 million in 2024 and 4.06 million in 2025. This is essentially the same, with total annual sales being the lowest since 1995. This is the lowest level in 30 years.
why? Two forces collided. While home prices remained at or near record highs, mortgage rates remained above 6%, constraining affordability for buyers. On the other hand, sellers were constrained by fixed interest rates. When homeowners with a 3% mortgage consider upgrading to a 6% or higher loan, most choose not to move. That limits inventory.
Interestingly, prices did not crash. Home price growth slowed significantly in 2025, with year-over-year increases in the low single digits. Weakness in demand was matched by weakness in supply, and this equilibrium prevented a crash. Think of it like a perfectly balanced seesaw. Neither side is winning, but neither side is falling.
Outlook for 2026: Recalibration, not rebound
Most major housing economists expect 2026 to improve more modestly than 2025, but not dramatically. The National Association of Realtors predicts that existing home sales will increase about 14% in 2026 compared to 2025 levels, and mortgage interest rates will average about 6%. House prices are expected to rise by around 4%, supported by steady demand and persistent supply shortages.
Common theme: 2026 is expected to be better than 2025, but that doesn’t mean the enthusiasm will return. We are not in a boom cycle. We are not in a crash cycle. We are in a recalibration cycle.
What does this mean on earth?
Affordable housing is expected to move and overpriced housing will remain. Negotiations will normalize. Concessions will appear again. Testing becomes important again. Inventories are gradually improving but remain below levels associated with oversupply. Affordability remains a critical constraint. The market is no longer permissive, it is selective.
What real estate professionals should do now
In this type of market, survival depends on the skilled professionals, not the passengers.
Remaster the pricing conversation: Accurate pricing thrives in stable to moderate valuation environments. Use absorption rates, days on market, and current buyer behavior rather than outdated comparables. Improve buyer education: Help buyers understand financing options, buyback rates, payment scenarios, and long-term equity benefits. Clarity breeds confidence. Recommit to consistent prospecting: In low-volume markets, agents are rewarded for generating conversations every day. Inventory is created by human relationships, not luck. Enhance your negotiation skills: Loans, emergency response, and inspections are back. Agents need to be skilled, not just responsive. Operate with financial discipline: Evaluate your marketing ROI. Protect your white space. Focus on conversions rather than vanity metrics.
conclusion
After reviewing real economic data, the narrative of a false collapse in 2024 followed by a dramatic turnaround and a “mission accomplished” boom in 2025 does not match the truth.
GDP growth slowed from 2024 to 2025 and job creation stagnated. Home sales remained at 30-year lows throughout both years. Prices slowed, but did not collapse.
And in 2026, it looks like we will see a gradual improvement rather than an explosive recovery.
This is not an easy market. It’s a professional market. And in a recalibrated environment, skills, not slogans, will be the competitive advantage. Plan for the worst. I wish you the best. Let your data lead the way.
