Economic Benefits of New Home Construction
Jobs, Jobs Jobs
Residential construction has a positive, direct impact on the U.S. economy.
For each new single-family home that is built, NAHB estimates that three jobs are created.
Jobs are generated in the industries where lumber, concrete, lighting fixtures, heating and cooling equipment, and other products that go into a home are produced. More jobs are created when real estate agents, lawyers and brokers provide services to home builders and home buyers. About half of the three jobs created by building an average single-family home are in the construction industry. Other jobs are spread over other sectors, with manufacturing ranking second.
A Generator of Tax Revenues
Other economic plusses of home building include the revenues generated for federal and local governments.
For each new single-family home that is built, NAHB estimates that it generates a total of $90,000 in government revenue -- $67,000 in federal taxes and $23,000 in state and local taxes.
This income is derived from several sources – from workers who are subject to federal, state and Social Security taxes and from business owners whose profits are similarly taxed. Beyond this, states often impose sales taxes on materials sold to home builders, and many local jurisdictions levy fees for approving building permits and extending utility services.
Housing Can Put America Back to Work
As of February 2011, U.S. housing starts totaled less than 500,000 at an annualized rate. This is well below the long-run trend of approximately 1.7 million new homes that are necessary to accommodate population growth and replacement of older housing stock.
The gap between current production and potential housing construction represents more than 3 million untapped American jobs. This gap is a result of multiple factors, including builders dealing with excess housing inventory, deferred household formations and a lack of construction financing. With housing contributing 15 percent to Gross Domestic Product, restoring the health of the housing industry is a crucial first step in putting America back to work.