- Q4 2025 GDP growth slowed to 1.4%, mainly due to a federal government shutdown.
- Real sales to private domestic purchasers grew by 2.4%, showing solid private sector activity.
- Commercial real estate faces demand uncertainty, but supply volumes remain manageable.
- Rising incomes outpace home prices for upper-income groups, supporting housing market stability.
GDP Slows, But Context Matters
US economic data for Q4 2025 initially appeared bleak, with annualized GDP growth of just 1.4%, well below both forecasts and the previous quarter’s pace, reports Globe St. Analysts pointed to the federal government shutdown as the main driver behind the weak headline number, with estimates suggesting the disruption knocked as much as 1.5 percentage points off growth. Adjusted for this, GDP could have landed between 2.3% and 2.9%, tempering the initial pessimism.
Private Sector Remains Resilient
Despite the subdued overall GDP, private sector fundamentals were healthier. Real sales to private domestic purchasers—which exclude government activity—rose by 2.4%, reflecting stable household and business demand. That trend aligns with recent data showing consumer outlays continuing to shoulder much of the economy’s expansion this year, even as headline growth figures fluctuate. Additionally, rising incomes outpaced home price gains for higher earners, contributing to a more balanced housing market. However, wage growth remains uneven, primarily benefiting upper income brackets, while middle and lower earners see less improvement.
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CRE Demand Faces Uncertainty
Persistent inflation and mixed government data have introduced uncertainty for commercial real estate demand forecasts. While the Federal Reserve’s preferred inflation gauge stayed stubborn at 2.9% in December 2025, supply levels in most markets remain moderate, reducing the risk of oversupply and leaving room for conditions to tighten even if absorption slows. The outlook depends on whether slowed growth persists or proves temporary as the effects of the shutdown diminish.
What’s Next
Commercial real estate stakeholders are monitoring economic indicators closely amid ongoing volatility. For now, subdued growth and inflation pose challenges, but fundamental private sector strength and manageable supply levels offer some reassurance that markets remain on stable footing.
