The slide in US residential investment appears to be over, after eight consecutive quarters of contraction.
The recovery now underway is expected to remove a major obstacle to continued economic expansion.
With new construction activity reaching the highest level in more than a year, the Atlanta Fed’s GDP tracker expects residential investment to add 0.1% to GDP growth in the second quarter.
Although this may not sound like much, it would mark the first positive contribution since early 2021.
limited availability in the resale market is driving many potential buyers toward new construction, helping to support demand even as mortgage rates continue to rise.
“The construction has been in the eye of the storm due to rising inflation and supply chain disruptions in 2021 and 2022,” said Bill Adams, chief economist at Bank of Comerica.
“The recent good news of construction makes it easy to imagine a soft landing or at least a soft landing for the economy”, he added.
