An economist from the National Association of Home Builders (NAHB) told Congress earlier this month that housing stands poised to serve as an engine of job growth as long as the right policies are in place.
Testifying before the Senate Banking Committee’s Subcommittee on Economic Policy during a 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 two-and-a-half years.
“This expansion has direct economic benefits,” Dietz said. “Housing provides the momentum behind an economic recovery because home building and associated businesses employ such a wide range of workers.”
Employment from new home 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.
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; and
• $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.
Currently, housing comprises about 15.5 percent of GDP, but Dietz said the industry still has room to grow.
“Typically, housing represents 17 to 18 percent of the GDP,” he said. “With a growing population and an aging housing stock, NAHB forecasts that single-family construction will increase 22 percent in 2014 to 760,000 units, and multifamily production will rise 6 percent to 326,000 units.”
Noting that 2014 should be the first year since 2007 in which total housing starts exceed one million homes, Dietz said this expansion will produce jobs.
“In April alone, home builders and remodelers added 13,100 jobs,” he said.
NAHB estimates that total housing construction over the next few years should return to just under 1.7 million combined single-family and multifamily starts on an annual basis.
Homeownership also represents the most important investment and source of savings for most middle-class households.
The latest economic data show that the primary residence represents 62 percent of the median homeowner’s total assets and 42 percent of their wealth.