Home Services Part in the Gross Domestic Product…
An indicator of housing strenth, 15-18% of the Gross Domestic Product is supported by the housing industry. This is brought about through two main categories that were pointed out in a First American Title REconomy Podcast (March 9, 2023). Odeta Kushi and Mark Fleming refer to the Residential Fixed Investment (RFI) and Housing Services categories hold most of what goes into housing’s contribution to the GDP. RFI holds construction of residential dwelling units from single family residences to large multi-family projects and manufactured homes (and real estate brokerage fees), and remodeling jobs. This amounts to 3.5% to 5% of the GDP point out two main categories of how the housing industry contributes to the GDP of the nation. 12% to 13% is made up of the consumer housing rents, owner imputed rent and utility payments.
These have remained very stable for the last quarter of 2022 with RFI at 4% and housing services at 12%. The RFI has been declining to this level during the past three quarters but is still average. A sharper decline would indicate a steeper reaction to the long-term market. Last month’s newsletter pointed out the increasing inventory of new homes and their incentives, but it does not appear to have created a doomed view of future housing. This is good not only as an indicator but also the employment and purchases involved in building and buying of new homes. Average hourly earnings in the construction sector increased 6.2% year/year as compared to a pre-pandemic growth average of 2.8%.
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