Housing’s share of the economy was 16.0% in the fourth quarter of 2025, according to the latest estimates of GDP produced by the Bureau of Economic Analysis. This share is down from 16.1% in the third quarter and is also lower than 16.3% as registered just one year ago. Residential construction, measured by residential fixed investment, subtracted from real GDP growth for each quarter in 2025, replicating a trend from 2022.
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 12.3% of GDP, constant 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 growth is 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 fourth quarter, RFI subtracted 6 basis points from the headline GDP growth rate, marking the fourth consecutive quarter of negative contributions. 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 1.6%, while residential equipment rose 2.1%.
Breaking down the components of residential structures, single-family RFI fell 5.2%, while multifamily RFI fell 3.6%. RFI for multifamily structures has contracted for nine consecutive quarters, recently due to declines in new supply and a shift in geography for multifamily construction to lower density markets. Permanent site structure RFI, which is made up of single-family and multifamily RFI, fell 4.9%. The “other structures” RFI category was the only one to rise, up 1.2% in the fourth quarter. This component consists primarily of manufactured homes, improvements, and dormitories. On a seasonally adjusted annual basis in the fourth quarter, private investment in permanent site structures was at $517.4 billion, while other structures totaled $640.6 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 fourth quarter, housing services represented 12.3% of the economy or $3.9 trillion on a seasonally adjusted annual basis. Real housing services expenditures rose 2.0% at an annual rate in the fourth quarter. Real personal consumption expenditures for housing grew 1.2%, while real household utilities expenditures increased 7.9%.
Personal consumption expenditures (PCE) for housing services are the largest component of PCE, making up 18.0% in the fourth quarter. The second largest component of PCE is health care services, at 17.2%. Expenditures on services were $14.8 trillion on a seasonally adjusted annual basis in the fourth quarter, more than double the expenditures on goods ($6.6 trillion).
This article was originally published by a eyeonhousing.org . Read the Original article here. .
