RSS Feed by Calculated Risk on 1/29/2024 02:43:00 PM
Monday, January 29, 2024
Q4 2023 GDP Details on Residential and Commercial Real Estate
The BEA released the underlying details for the Q4 advance GDP report on Friday.
The BEA reported that investment in non-residential structures increased at a 3.2% annual pace in Q4. Investment in petroleum and natural gas structures increased in Q4 compared to Q3 and was up 5% year-over-year.
Click on graph for larger image.
The first graph shows investment in offices, malls and lodging as a percent of GDP.
Investment in offices (blue) increased slightly in Q4 and was up 5.0% year-over-year. And mostly unchanged as a percent of GDP.
Investment in multimerchandise shopping structures (malls) peaked in 2007 and was up about 8% year-over-year in Q4. The vacancy rate for malls is still very high, so investment will probably stay low for some time.
Lodging investment decreased in Q4 compared to Q3, and lodging investment was up 5% year-over-year.
All three sectors - offices, malls, and hotels - were hurt significantly by the pandemic. And the office vacancy rate is at a record high, and this will push down office investment.
The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single-family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes).
Investment in single family structures was $417 billion (SAAR) (about 1.5% of GDP) and was up 4% year-over-year.
Investment in multi-family structures was up slightly in Q4 to $135 billion (SAAR) from Q3, and up 14% YoY.
Investment in home improvement was at a $345 billion (SAAR) in Q4 (about 1.2% of GDP). Home improvement spending was strong during the pandemic but has declined as a percent of GDP recently.
The second graph is for Residential investment components as a percent of GDP. According to the Bureau of Economic Analysis, RI includes new single-family structures, multifamily structures, home improvement, Brokers’ commissions and other ownership transfer costs, and a few minor categories (dormitories, manufactured homes).Investment in single family structures was $417 billion (SAAR) (about 1.5% of GDP) and was up 4% year-over-year.
Investment in multi-family structures was up slightly in Q4 to $135 billion (SAAR) from Q3, and up 14% YoY.
Investment in home improvement was at a $345 billion (SAAR) in Q4 (about 1.2% of GDP). Home improvement spending was strong during the pandemic but has declined as a percent of GDP recently.
Note that Brokers' commissions (black) increased sharply as existing home sales increased in the second half of 2020 but declined when mortgage rates increased. Brokers' commissions were down 5% year-over-year in Q4.
