Does Rent Count in GDP? From Tenant to Homeowner

Gross Domestic Product (GDP) measures the total monetary value of all finished goods and services produced within a country’s borders over a specific time period. The U.S. Bureau of Economic Analysis (BEA) calculates this economic indicator, which reflects the nation’s economic health. Rent, in its various forms, is recognized as a component within this calculation.

Rent from Tenant-Occupied Homes

Actual rental payments made by tenants for residential properties, such as apartments and houses, are directly included in GDP. These payments fall under the “consumption” component of GDP, as they represent the purchase of a final service: housing. When individuals pay rent, they are consuming a housing service provided by a landlord, and this market transaction contributes to economic output.

The money tenants pay to landlords for these housing services is a straightforward contribution to GDP. This reflects a clear exchange for a service consumed by households.

The Concept of Imputed Rent for Homeowners

For homeowners, “imputed rent” is included in GDP. This is an estimated value of the housing services that homeowners provide to themselves by living in their own properties. This estimation ensures that GDP figures remain comparable across different countries, regardless of their varying homeownership rates.

The inclusion of imputed rent prevents GDP from appearing to decline simply because more people own their homes rather than renting. If a homeowner were to rent out their property, they would receive rental income, and by occupying their own home, they are essentially “renting” it from themselves. This approach ensures that the economic activity generated by providing housing services is captured, whether it involves a market transaction or is self-provided.

Statistical agencies like the U.S. Bureau of Economic Analysis estimate this value by looking at market rents for similar properties in the same area. This estimation allows for a consistent valuation of housing services for all occupied dwellings, regardless of ownership status. Overall, consumption spending on housing services, which includes both actual and imputed rents, typically averages between 12-13% of GDP.

Rent in Commercial Real Estate and Other Contributions

Rent paid for commercial properties, such as office buildings, retail spaces, or industrial facilities, is treated differently in GDP calculations than residential rent. These payments are considered an intermediate business expense for the companies occupying the space. Unlike residential rent, commercial rent is not directly counted in the consumption component of GDP as a final service.

Instead, the economic contribution to GDP from commercial real estate primarily stems from the value of the goods and services produced by the businesses operating within these properties. The construction of new commercial buildings, however, is a direct contribution to GDP under the investment component. New commercial real estate development and the operations of existing commercial buildings contributed an estimated $2.5 trillion to U.S. GDP in 2023. The construction industry as a whole accounts for approximately 4.5% of the country’s GDP.

Beyond rent and new construction, other real estate-related services also contribute to GDP. Services provided by real estate agents, including commissions from property sales, are included as part of economic activity. The BEA estimated that real estate commissions and related costs totaled about $170 billion, or 0.6 percent of US GDP, in 2024. Additionally, property management services, which support the operation and maintenance of both residential and commercial properties, contribute to the overall economic output.