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Housing Makes a Big Contribution to State Economies
New research from NAHB economists showing that housing is making a significant contribution to Gross State Product (GSP) is now available to help residential builders and developers challenge no-growth initiatives arising in their state legislatures.
Based on statistics from 2002, the most recent year for which estimates are available, the NAHB analysis shows that housing’s share of GSP — the state equivalent of the Gross Domestic Product (GDP) — reached 20% in Hawaii, California and Florida and 19.5% in Colorado. It was as high as 27% in Nevada. The average for all 50 states and the District of Columbia was 15.86%.
"Home builder associations are focused on advancing the building community's agenda with their state and local governments," said Irene Porter, executive director and chief executive officer of the Southern Nevada Home Builders Association. "This data from NAHB helps us demonstrate to legislators just how important the housing industry is to our economy. I think lawmakers will find it very interesting that this industry generates one-in-four dollars spent in the state."
The share of housing in the nation’s goods and services has been rising steadily for the last several years and now exceeds 16% of the U.S. GDP, according to NAHB economist Natalia Siniavskaia, who has been conducting the state-level research for the association.
“Most of this contribution, more than 10%, is housing services created by the existing stock of homes,” she said. “However, a major factor that contributed to the steadily rising share was booming residential construction as reflected in the consistently high number of housing starts, increasing remodeling expenditures and the rising value of new homes.”
In 2002, the total home building share of GSP exceeded 6% in seven states: Nevada (8.32%), Vermont (7.93%), Florida (7.13%), Colorado (6.77%), Idaho (6.49%), Arizona (6.45%) and South Carolina (6.19%).
On average, home building contributed to 4.87% of state output of goods and services in 2002. That amount includes employee compensation and indirect business taxes and profits from home builders and remodelers, producers of building materials and housing-related products, brokers and others.
“While construction companies can easily use local distributors and service providers, the production of major construction materials often takes place outside of the state where the homes are built,” according to Siniavskaia. “For this reason, home building not only contributes to local economies, it also stimulates economic activity across state borders. Booming residential construction in states like Nevada, Florida, Colorado and Arizona spills over to other states by creating demand for additional raw materials and services.”
In Vermont and Wisconsin, where there is significant manufacturing of wood, fabricated metal and nonmetallic mineral products, industries supplying residential construction accounted for 3.6% and 2.5% of GSP, respectively, in 2002.
Even in the states with the lowest share of housing — South and North Dakota — housing’s share of GSP was around 10%.
In 2002, housing generated $1.6 trillion in income for the U.S. economy.
For more information, click here; or e-mail Natalia Siniavskaia at NAHB, or call her at 800-368-5242 x8441.
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