New housing construction has always had a positive impact on our economy. The effects reach across many different sectors from home loans to creating new jobs and supporting our communities through tax revenue.
The home loan sector supports growth in many areas. Investors are able to put funds together that benefit banks, lenders, private parties, buyers, sellers and more. The effect of people being able to borrow money puts real estate brokers to work, house inspectors, appraisal services, lawyers and title companies. Some of these areas are now experiencing growth that opens up opportunity for those who are familiar with these services but have been out of work because of the recession.
NAHB estimates that 3 new jobs are created for each new house that is built in our country. Of those 3 jobs, about half go to the construction industry and the rest to other sectors. Some of the industries impacted the most are lumber, electrical contractors, architects and HVAC. The really good news is most of what goes into a new home is made in the USA not in China or some other overseas country. Manufacturing here at home is a big part of keeping our economy moving forward in 2012 and the years to come.
Tax revenue is a sometimes overlooked aspect of recovery. Houses that are built and sold to families provide revenue that is used in many ways both locally and on a federal level. These tax dollars go to our schools and have impact to our communities. Tax dollars provide jobs at the government and state level. The estimates from NAHB are staggering. They report each new home built will generate a total of $90,000 in government revenue. This breaks down to $67,000 in federal taxes and $23,000 for local and state taxing authorities.
When it comes to getting our economy back on track, putting Americans back to work is the natural order for a solid recovery. Housing is an industry that can help get this done. When our economy is running at a normal pace, housing accounts for about 17% of our GDP. Right now our current rate of construction is approximately 628,000 total homes being built annually. Our typical trend is about 1.7 million new homes being built in a 12 month period. Looking at numbers like that, you can see we have the potential to put 3 million Americans back to work who also contribute to supporting our economy. More than ever, focus needs to be put on our housing industry because of the far reaching impact it has on so many Americans.
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