The Beginning of 2022 Sees Higher GDP
A drop in growth pushed the housing share of the economy up at the beginning of 2022. The overall GDP dropped at a 1.4% annual rate. This was due to the increased inventories and a jump in imports. The housing’s share of GDP rose to 16.7%.
The beginning of the year also saw a 4.8% increase in GDP in terms of residential fixed investment. There will be challenges this year for home construction. There will be a higher interest rate due to tightening monetary policy. RFI added 10 basis points to the headline GDP growth rate at the start of 2022.
Housing activities add to the GDP in two ways. First through RFI which stands for residential fixed investment. This measures how home building, multifamily development, and remodeling contribute to GDP. It can do this through the construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees.
Second is the measure of house services and how it affects GDP. This includes gross rents (including utilities) paid by renters, owners’ imputed rent (an estimate of how much it would cost to rent owner-occupied units), and utility payments. In the first quarter of 2022 housing services made up 11.9% of the economy, totaling $2.9 trillion on a seasonally adjusted annual basis.
This year the recent interest in housing has definitely affected the economy in a positive way. The shares are near historic norms.
