Key Points:

• Existing-home sales are hovering just above 4 million annualized sales, far below pre-pandemic levels.
  
  
• Housing contributes to GDP via new construction and ongoing housing services, totaling 16 percent of GDP last quarter.
  
  
• Fewer home sales curbs spending on everything from sofas to remodeling services, acting as a drag on broader growth.
  
  

Existing-home sales continue to struggle, hovering just above 4 million annualized. That’s well below the more typical pre-pandemic pace of 5 to 5.5 million sales, and far from the peak of over 6 million at the height of the pandemic boom. Mortgage rates near 7 percent and still-high home prices have sidelined many would-be buyers and sellers. But this slowdown in sales isn’t just a story about potential buyers and sellers, it’s impact ripples through the broader economy.

“You can think of this as a kind of ‘housing turnover multiplier’ — the pace of sales impacts economic demand for a variety of products and services, even though existing-home sales themselves aren’t counted as new output in GDP.”

How Does Housing Show Up in GDP?

Housing’s impact to GDP is calculated in two primary ways. First is residential fixed investment (RFI), which is the most cyclical and covers new-home construction, major remodels, and brokers’ fees. Second is housing services, the larger and more stable component, which includes rents paid by tenants, utilities, and an estimate of what homeowners would pay to rent their own homes (called owners’ imputed rent).

In the first quarter of 2025, the RFI totaled roughly 4 percent of GDP, slightly below its historical average of 4.5 percent. Housing services were 12.3 percent of GDP, a bit above the pre-pandemic norm of 11.4 percent. Altogether, housing accounted for just over 16 percent of GDP last quarter — in line with pre-pandemic averages, though notably below the nearly 19 percent share seen before the Global Financial Crisis, which was driven by more robust levels of homebuilding than today.

The ‘Housing Turnover’ Multiplier

Existing-home sales don’t directly contribute to GDP the way new-home construction does. Since the home itself already exists, it’s not measured as a newly produced output. However, existing-home sales do have important indirect economic effects. Home purchases typically unlock a burst of consumer spending on durable goods — furniture, appliances, electronics — and trigger demand for services, like remodeling, moving, inspections, and mortgage origination. A sustained downturn in sales can soften this extra consumption, which shows up in the GDP data. The chart below illustrates this relationship. Existing-home sales year-over-year growth has remained negative for 15 consecutive quarters (except for the fourth quarter of 2024), while spending on durable goods tied to housing is still growing. The resilience may reflect a lag, with consumers continuing to spend after moving. But, if existing-home sales remain subdued, history suggests that durable goods spending will eventually slow as well.

There’s also an income effect: real estate agents, brokers, lenders, and others in housing-related industries see their activity — and earnings — slow when transactions drop. Fewer home sales may not necessarily cause an economic downturn on their own, but they can contribute to softer household consumption and services output, particularly when the slowdown is prolonged. You can think of this as a kind of ‘housing turnover multiplier’ — the pace of sales impacts economic demand for a variety of products and services, even though existing-home sales themselves aren’t counted as new output in GDP.

So, while existing-home sales might not directly show up as new output, they act as a key conduit through which consumer spending flows. Monitoring housing turnover gives us an important read on the housing market, but also a glimpse of the potential demand for everything from couches to contractors and, ultimately, on the health of the broader economy.

June 2025 Existing-Home Sales Outlook Highlights

For the month of June, First American updated its Existing-Home Sales Outlook Report to show that:

• Existing-home sales for June are expected to decrease 0.05 percent from last month’s pace of sales, and increase 2.5 percent compared with the pace of sales a year ago.
  
  
• The largest contributors to the projected monthly decrease in existing-home sales are slower household formation (-0.2 percent) and a stronger rate lock-in effect as measured by the lagged* spread between the prevailing market mortgage rate and the average rate for all outstanding mortgages (-0.1 percent).

^{*The spread is incorporated with a two-month lag in the Existing-Home Sales Outlook model.}

Methodology

Our Existing-Home Sales Outlook Report ‘nowcasts’ existing-home sales, which include single-family homes, townhomes, condominiums, and co-ops on a seasonally adjusted annualized rate based on the historical relationship between existing-home sales, U.S. demographic trends, house-buying power, and the prevailing financial and economic conditions, as well as momentum, a weight assigned to past values. Please note that the Existing-Home Sales Outlook Report is based on assumptions about demographic, economic and financial conditions. Actual values may differ from those projected. Recent existing-home sales estimates are subject to revision to reflect the most up-to-date information available on the economy, housing market and financial conditions.