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US GDP Grows 3.4% in Q3, but Housing Investment Falls 3.3%

  • by- Grihik
  • Oct 30, 2026
The economy grew 3.4% in Q3 on spending and AI investment, but residential investment fell 3.3%. See the housing detail and inflation data.
US GDP Grows 3.4% in Q3, but Housing Investment Falls 3.3%

The U.S. economy grew at a 3.4% annual rate in the third quarter, up from 2.2% in the second, the Bureau of Economic Analysis reported on Thursday. Economists had expected about 3.1% to 3.2%. Housing was the notable exception.

What drove the growth?

  • Consumer spending: up 3.8%

  • Business investment: nonresidential fixed investment rose 12.7%, helped by a surge in information-processing equipment tied to AI

  • Underlying demand: real final sales to private domestic purchasers rose 4.9%

What happened in housing?

Residential fixed investment fell 3.3% in the quarter. According to the National Association of Home Builders' analysis:

  • Single-family construction: down 5.0%

  • Multifamily construction: up 0.3%

  • Home improvements: up 2.7%

 

What about inflation?

The GDP report showed inflation cooling over the quarter: the PCE price index rose at a 2.1% annual rate (5.0% in Q2), and core PCE rose 2.5% (3.3% in Q2). But the monthly September data was hotter: PCE prices rose 0.5% in the month and 3.6% over the year (from 3.4% in August), and core PCE rose 0.3% on the month and 3.1% over the year (from 3.0%).

Why does it matter for housing?

Strong growth and sticky inflation make it harder for the Fed to cut rates and keep mortgage rates elevated. The Fed held at 3.75%-4.00% on Wednesday with two dissents favouring a hike, and markets see a December hike as possible.

What to watch

The second estimate of Q3 GDP is due November 25. Personal income rose only 0.2% in September and spending 0.5%, a sign household budgets are tight.