The Economic Impact of Housing

It is well known that home ownership is important to the fabric of our society. But what may not be so well known is the importance housing has on the economy.

Not only is it a key engine of national gross domestic product, it creates jobs at the local level, boosts tax revenues for state and local governments and increases sales for all kinds of businesses.

According to the National Association of Home Builders, investment in housing -- that is, the creation of new subdivisions and apartment communities -- accounts for 4.3 percent of GDP. And housing sector consumption -- expenditures for housing such as monthly payments and utilities -- was responsible for 9.7 percent.

That's a total of 14 percent, a share that "has varied little over the past 50 years," says Kent Conine, a Dallas builder and first vise president of the 205,000-member trade group.

But that's not all, according to Kent Colton, a senior scholar at the Harvard Joint Center for Housing Studies, who adds that if you include all spending for furniture, appliances and the like, housing's share of GDP is something on the order of 22 percent.

At the local level, a positive economic impact is felt even before the first shovel hits the ground, and it continues for as long as the house is occupied by a household purchasing locally produced goods and services.

NAHB's computer model estimates that the construction of 100 single-family homes generates $10.7 million in new income to local businesses and workers in the year the houses are built. And every year thereafter, they produce $2.9 million in income.

Building 100 new houses creates 257 jobs in the community where they are located and 75 jobs every year thereafter in support of the families who eventually occupy them. In 10 years, says Conine, the local impact is valued at $37 million.

Building 100 apartment units doesn't generate as many jobs or as much revenue, but it still has a positive impact. It produces $5.2 million in local income during the year of construction and $1.8 million each year afterwards, for a total of $23 million over a 10-year period.

As far as work is concerned, building 100 multi-family houses creates 122 jobs during construction and 46 jobs every year thereafter.

Conine and the NAHB also point out that the impact of building houses reached "far beyond" the construction sector into all phases of the economy. Local governments realize new revenue as not only builders expand and pay taxes but so do the various and numerous businesses which serve the growing population.

The big trade group, whose 205,000 members employee something on the order of 8 million people, figures that over a 10-year period, building 100 houses generates additional taxes and other revenues of $5.4 million. For 100 apartments, the total is $3.7 million.