In the News – Housing Share of GDP Expands

In the News – Housing Share of GDP Expands

With the release of the final estimates of first quarter 2016 GDP growth (revised up two-tenths to a 1.1% growth rate), housing’s share of gross domestic product (GDP) ticked up slightly to 15.4%.  The home building and remodeling component – residential fixed investment – as a share of GDP expanded to 3.4%.

Housing-related activities contribute to GDP in two basic ways.

The first is through residential fixed investment (RFI). RFI is effectively the measure of the home building, multifamily development, and remodeling contributions to GDP. It includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes and brokers’ fees.

The second impact of housing on GDP is the measure of housing services, which includes gross rents (including utilities) paid by renters, and owners’ imputed rent (an estimate of how much it would cost to rent owner-occupied units) and utility payments. The inclusion of owners’ imputed rent is necessary from a national income accounting approach, because without this measure, increases in homeownership would result in declines for GDP. For the first quarter, housing services was 12.0% of the economy or $1.98 trillion (SAAR).

Check out the article at NAHB

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