U.S. housing sector gives economy a lift

New York /
Oct.October 26, 2012 02:30 PM

The recovering housing sector is giving the economy a boost, but is not delivering the kind of results that would be seen if the economy were more robust, according to a new government report on economic growth cited by the Wall Street Journal.

The housing sector has positively contributed to the U.S. GDP for the past six quarters. In the third quarter alone, residential fixed investment accounted for a 0.33 percentage point growth in the GDP — an increase from 0.19 quarter-over-quarter and 0.03 year-over-year.

Both home construction projects and broker commissions help housing contribute to the overall economy. In addition, through the so-called “wealth effect” — defined as people spending more when their properties increase in value — it also has an effect on consumer spending.

According to Jan Hatzius, chief economist at Goldman Sachs Group, the wealth effect has not yet had a major impact on consumer spending, mainly because prices are only recently on the upswing. “However, the wealth effect is also starting to contribute to the improvement as the swing from continued house-price declines in 2010-2011 to house price gains in 2012 gradually makes itself felt in consumption,” Hatzius wrote in a report. [WSJ] — Zachary Kussin


Related Articles

arrow_forward_ios
(Getty)
Weekly home listings hit record low
Weekly home listings hit record low
The year-over-year rise in home prices was just below the 19.8 percent annual rise in August. (iStock)
Home prices up 20%, but buyers, take heart
Home prices up 20%, but buyers, take heart
The report shows the small uptick among single-family homes, townhomes, condominiums and co-ops. (iStock)
After rebound, existing home sales growth slows in October
After rebound, existing home sales growth slows in October
(iStock)
Manufactured home construction projected to hit 15-year high
Manufactured home construction projected to hit 15-year high
So much for that lull: bubble worries return for Canadian property
So much for that lull: bubble worries return for Canadian property
So much for that lull: bubble worries return for Canadian property
(L-R) Four Seasons Sotheby’s International Realty's Gary DiMauro, Redfin's New York market manager Matthew Frary; Four Seasons Sotheby’s International Realty President Laurie Mecier-Brochu and CEO Alan DiStasio are expanding their Hudson Valley footprint (Redfin, Four Seasons Sotheby’s International Realty)
Battle for Hudson Valley heats up as Sotheby’s, Redfin seek to cash in
Battle for Hudson Valley heats up as Sotheby’s, Redfin seek to cash in
Click, bid, buy: Suffolk County breaks precedent with virtual auction
Click, bid, buy: Suffolk County breaks precedent with virtual auction
Click, bid, buy: Suffolk County breaks precedent with virtual auction
(iStock/Illustration by Kevin Rebong for The Real Deal)
Moves hit 73-year low despite so-called pandemic migration
Moves hit 73-year low despite so-called pandemic migration
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...