The Commerce Department released the advance figure for second quarter GDP this (Friday) morning. The estimate of GDP growth came in at 1.5%. Analysts had expected a reading of 1.2% for the period, following a 1.9% increase for the first quarter, indicating decelerating economic growth. For the housing market, the good news continues to pour in.
Residential fixed investment (home purchases and investment) drove a portion of the increase in GDP. Residential investment increased 9.7% in the second quarter, compared with an increase of 20.5% in the first quarter. This marks the fifth consecutive quarter of residential investment growth. In contrast, between the fourth quarter of 2008 and the first quarter of 2011, residential investment declined 7 out of 10 periods.
Yesterday, the National Association of Realtors released June pending home sales figures, showing a month-over-month decrease of 1.4% in pending sales. The group reports that lack of available inventory is actually depressing sales volumes, which are 15.1% higher than the prior year.
The five consecutive quarters of GDP expansion in residential investment correlates strongly with SPDR S&P Homebuilders (NYSEARCA:XHB) one-year chart, showing that the ETF has nearly doubled off of 52-week lows. Investors may expect this type of return to continue, as long as expansion in the housing market takes hold.
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