Housing Share of GDP in Q1 2024 Rises Above 16%

When looking at gross domestic product (GDP), housing plays a significant role as one of the most important sectors of the economy and contributes to the growth of the wider U.S. economy, creating jobs and affecting the consumer economy in a variety of ways, including wealth building.

During the Q1 2024, housing’s share of the U.S. economy rose to 16.1%, the National Association of Home Builders' Eye On Housing reports, marking the first time that housing’s share of gross domestic product (GDP) has risen above 16% since 2022. Overall U.S. GDP increased at an annual rate of 1.6%, following a 3.4% increase during Q4 2023 and a 4.9% increase in Q3 2023.

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

The first is through residential fixed investment (RFI). RFI is effectively the measure of 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.

For the first quarter, RFI was 4.0% of the economy, recording a $1.1 trillion seasonally adjusted annual pace. RFI grew 13.9% at an annual rate in the first quarter, the highest rate seen since the fourth quarter of 2020 (30.1%).

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 in GDP.

For the first quarter, housing services represented 12.1% of the economy or $3.4 trillion on a seasonally adjusted annual basis. Housing services grew 1.4% at an annual rate in the first quarter.

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