Housing’s share of the economy was 15.9% in the first quarter of 2026, according to the latest estimates of GDP produced by the Bureau of Economic Analysis. This share is down from 16.0% in the fourth quarter and is lower than 16.5% registered just one year ago. Residential construction, measured by residential fixed investment, fell at its fastest pace in over three years, while household expenditures on housing services continued to remain steady.
The more cyclical home building and remodeling component–residential fixed investment (RFI)–was 3.7% of GDP, down from 3.8% in the previous quarter. The second component, housing services, was 12.2% of GDP, down from 12.3% in the previous quarter. The graph below plots the share for housing services and RFI, along with housing’s total share of nominal GDP.
Housing service expenditures are much less volatile when compared to RFI due to the cyclical nature of RFI. Historically, RFI has averaged roughly 5% of GDP, while housing services have averaged between 12% and 13%, for a combined 17% to 18% of GDP. These shares tend to vary over the business cycle. However, the housing share of GDP lagged during the post-Great Recession period due to underbuilding, particularly in the single-family sector.
Residential Fixed Investment
In the first quarter, RFI subtracted 31 basis points from the headline GDP growth rate, marking the fifth consecutive quarter of negative contributions. This was the largest negative contribution since the fourth quarter of 2022. RFI was 3.7% of the economy, recording a $1.2 trillion seasonally adjusted annual pace. Among the two segments of RFI, private investment in structures fell 8.2%, while residential equipment rose 6.7%.
Breaking down the components of residential structures, single-family RFI fell 8.2%, while multifamily RFI rose 1.9%. This marks the second consecutive increase in RFI for multifamily structures, as the estimate in the fourth quarter of 2025 was revised to 1.7%, up from a decline of 3.6%. Permanent site structure RFI, which is made up of single-family and multifamily RFI, fell 5.9%. The “other structures” RFI category fell significantly, down 10.1% in the first quarter. This component consists primarily of manufactured homes, improvements, and dormitories. On a seasonally adjusted annual basis in the first quarter, private investment in permanent site structures was at $521.4 billion, while other structures totaled $627.9 billion.
Housing Services
The second impact of housing on GDP is the measure of housing services. Similar to the RFI, housing services consumption can be broken into two components. The first component, housing, includes gross rents paid by renters, owners’ imputed rent (an estimate of how much it would cost to rent owner-occupied units), rental value of farm dwellings, and group housing. 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. The second component, household utilities, is composed of consumption expenditures on water supply, sanitation, electricity, and gas.
For the first quarter, housing services represented 12.2% of the economy or $3.9 trillion on a seasonally adjusted annual basis. Real housing services expenditure rose 1.3% at an annual rate in the fourth quarter. Real personal consumption expenditures for housing grew 1.2%, while real household utilities expenditures increased 1.6%.
Personal consumption expenditure (PCE) on housing services is the largest component of PCE, making up 18.0% in the first quarter. The second largest component of PCE is health care services, at 17.2%. Expenditure on services was $15.0 trillion on a seasonally adjusted annual basis in the fourth quarter, more than double the expenditure on goods ($6.7 trillion).
This article was originally published by a eyeonhousing.org . Read the Original article here. .
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