Housing-Related Activities' Impact on GDP

The housing industry's share of gross domestic product (GDP) decreased to 15.3 percent in the first quarter of 2018, while residential fixed investment (RFI), including remodeling and home building, held at 3.5 percent.

RFI is the effective measure of remodeling, home building, and multifamily development contributions to the GDP, including production of manufactured homes, brokers' fees, and construction of new single-family and multifamily structures. RFI hit a $603 billion seasonally adjusted annual pace in the first quarter of this year, reports the National Association of Home Builders, while historically RFI averages about 5 percent of GDP.

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 11.8 percent of the economy or $2.06 trillion on seasonally adjusted annual basis.

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