Housing’s share of the economy decreased at the end of the fourth quarter of 2022. While GDP increased for the second consecutive quarter, housing’s share of GDP decreased 20 basis points to 15.9% in the fourth quarter, according to an analysis by the NAHB.
In the fourth quarter, the more cyclical home building and remodeling component – residential fixed investment (RFI) – decreased to 4.0% of GDP. Home construction continues to face challenges such as higher interest rates and decreased housing affordability. RFI subtracted 129 basis points from the headline GDP growth rate in the fourth quarter of 2022.
In 2022, RFI made up 4.4% of GDP which is down from 4.8% in 2021. Housing services made up 11.8%, down from 11.9% in 2021. Housing’s share was 16.2% over the year, down from 16.7% in 2021.
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 fourth quarter, housing services represented 11.9% of the economy or $3.1 trillion on a seasonally adjusted annual basis.
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