Housing’s Direct Economic Impact

Building a home impacts the national economy in a number of ways.

Probably the most obvious way is by employing the workers who actually build the structure, but the impacts are broader and extend to other industries as well. For example, jobs are generated in the industries that produce and distribute lumber, concrete, lighting fixtures, heating equipment, and other products that go into a home. Additional jobs are generated for professionals such as architects, lawyers, lenders, real estate agents and others who provide services used by home builders.

Across all industries in 2005, National Association of Home Builders (NAHB) estimates that building an average housing unit generates:

  • 3.47 jobs, for an average single family unit

  • 1.29 jobs, for an average multifamily unit

The wages and salaries earned in the jobs generated by home building are subject to income and Social Security taxes. Profits earned by owners of the businesses 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, extending utility service, and for school-related or other impacts attributed to residential construction.

At the federal, state and local levels combined in 2005, NAHB estimates that home building generates:

  • $82,269 in tax and other government revenue, for an average single family unit

  • $30,807 in tax and other government revenue, for an average multifamily unit

Revenue for particular state and local governments depends on the types of taxes and fees they have adopted, the items subject to those taxes and fees, and the relevant tax and fee rates. These all vary considerably across the more than 87,000 state and local jurisdictions in the U.S.