The following is NAR Chief Economist Lawrence Yun’s reaction to this morning’s release of U.S. Gross Domestic Product (GDP) during this year’s third quarter:
“The economy looks solid as GDP grew by 2.9% on an annualized basis in the third quarter. This is only the very first read based on incomplete information and there will be revisions in the upcoming months. Export growth of 10% was a big help in boosting the economy. More construction of commercial buildings, which rose by 5%, also helped the economy. On the downside, residential investment fell slightly as housing starts and home sales were stalling a bit in the third quarter.
The Federal Reserve could be tempted to hurry the interest rate hike because of the good GDP number. We should keep in mind however that the average GDP growth rate in the post-recession period over the past six years has been at a subpar performance of only 2% a year, rather than the long-term U.S. historical average of 3%. Moreover, the latest GDP on a year-over-year basis is only 1.5%. Still, the latest GDP growth rate is implying accelerated job gains and thereby boosting income for households. Home sales consequently should rise in the upcoming year.”