Housing's Share of GDP in Q1

The first estimate of gross domestic product (GDP) growth in the first quarter of 2019 shows that housing's share continues to trend downward, hampered by affordability issues.

The Q1 2019 GDP growth rate was at 3.2 percent, and housing's piece of the pie dropped to 14.7 percent. The National Association of Home Builders reports that home building and remodeling, the residential fixed investment component, made its fifth negative GDP growth contribution in a row, dropping to slightly less than 3.2 percent of GDP.

Housing-related activities contribute to GDP in two basic ways. The first is through residential fixed investment (RFI). 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.

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