Due to the pandemic, market conditions evolved with a renewed focus on the importance of housing, a changing geography of housing demand, and the lack of inventory for sale. However, higher interest rates due to tighter monetary policy will increase housing affordability challenges and reduce the push for single-family construction. The RFI is, in effect, the measure of the contributions to GDP of housing construction, multifamily development and remodeling. The second impact of housing on GDP is the measure of housing services, which includes gross rents (including utilities) paid by tenants and utility payments and rent charged to landlords (an estimate of how much it would cost to rent units occupied by their owners).
In the fourth quarter, the most cyclical component of housing construction and remodeling—residential fixed investment—fell to 4.6% of GDP.
