As policymakers begin debate on housing finance and budget issues that will impact job creation and future growth, they must understand the important role that housing plays in the U.S. economy. Considering the enormity of the total number of jobs attached to housing, a sector that normally accounts for more than 17 percent of the nation’s Gross Domestic Product, now is hardly the time to step back from the nation’s long-standing commitment to homeownership.
Testifying before the Senate Banking Committee’s Subcommittee on Economic Policy during a May 7 hearing examining the drivers of job creation, NAHB economist Robert Dietz said that home building and remodeling have generated 274,000 jobs over the past 2 1/2 years.
“This expansion has direct economic benefits,” said Dietz. “Housing provides the momentum behind an economic recovery because home building and associated businesses employ such a wide range of workers.
Employment from new construction and remodeling has a wide ripple effect. About half the jobs created by building new homes are in construction. They include framers, electricians, plumbers and carpenters. Other jobs are spread over other sectors of the economy, including manufacturing, retail, wholesale and business services.
Perhaps more than any other consumer product, housing is “Made in America.” New homes and apartments don’t arrive in this country on container ships from Europe or Asia, and most of the products used in home construction and remodeling are manufactured here in the United States.
NAHB analysis of the broad impact of new construction shows that building 1,000 average single-family homes generates:
2,970 full-time jobs
$162 million in wages
$118 million in business income
$111 million in taxes and revenue for state, local and federal governments
Similarly, construction of 1,000 rental apartments, including units developed under the Low Income Housing Tax Credit, generates 1,130 jobs while $100 million in remodeling expenditures creates 890 jobs.
More than 1.2 million residential construction jobs have been lost since April 2006. The pace of recovery is debatable, but based purely on population growth and demographics, the U.S. will need to build 17 million additional homes over the next decade.
The gap between current production and potential housing production is about 700,000 homes. That represents more than
2 million untapped American jobs. This gap is a result of multiple factors, including deferred household formations, a lack of construction financing and flawed appraisal practices under which new homes get compared to distressed and foreclosed properties, thereby distorting true market values.
A strong economy is dependent upon a healthy housing market. The path forward is perfectly clear: Congress needs to take actions to restore the health of the housing industry to put America back to work.
This is a sentiment shared by American voters as well. An NAHB survey of 2012 voters conducted by Public Opinion Strategies and Lake Research Partners found that despite the ups and downs of the housing market, home owners and non-owners alike consider owning a home essential to the American Dream and support politicians who embrace pro-housing policies and the mortgage interest deduction.
An overwhelming 74 percent of the respondents said that owning a home is worth the risk of the fluctuations in the market and 68 percent of those who do not own a home say it is a goal of theirs to eventually buy one. Equally telling, more than seven out of 10 of all Democrats, Republicans and Independents agree that tax incentives to promote homeownership are reasonable and two-thirds of the survey respondents believe the federal government should play a role to ensure that 30-year home loans remain readily available and affordable.
The NAHB poll is consistent with a New York Times/CBS News survey that reveals more than nine out of 10 Americans oppose eliminating the mortgage interest deduction; a Harris Interactive survey that shows more than four out of five renters desire to be home owners; a poll released in 2012 by the Woodrow Wilson International Center for Scholars, which found that voters also placed a very high importance on homeownership; and a United Technologies/National Journal Congressional Connection Poll conducted in July 2013 which found that 86 percent of those polled said it was either “very important” or “important” to keep the mortgage interest deduction.
For more information on this topic, click on the following links:
Senate testimony of NAHB economist Robert Dietz on housing’s role in creating jobs
NAHB poll finds voters oppose policies making it more difficult to own a home
Impact of home building and remodeling on U.S. economy
Housing’s contribution to Gross Domestic Product