Housing will lead the economic recovery, says the National Association of Home Builders’ Chief Economist Robert Dietz. Low mortgage rates, a renewed focus on the importance of home, and a lack of for-sale inventory prove housing to be a relative bright spot as the overall economy struggles to establish a rebound, Dietz writes on NAHB’s Eye on Housing Blog.
Due to this broader weakness (GDP declined at a -32.9% rate for the second quarter) and gains for residential-related economic activity, housing’s share of GDP reached its highest mark since the third quarter of 2007, increasing to 16.2% during the second quarter of 2020. The home building and remodeling component—residential fixed investment—held at 3.3% of GDP.
Housing gains will continue as the consequences of the virus crisis are likely to lead to a reversal for declining home size trends and a greater need for additional home office space. For these and other reasons, home building and remodeling have demand-side potential that can help fuel a recovery in the labor market, given the widespread impact that construction has on the economy in terms of jobs and state/local tax revenue.
Read more at NAHB’s Eye on Housing blog.