A new study looking at the impact of new-home builds reveals its potential to lead the way in the US economy. The sector is set to have particular relevance as the nation moves forward in containing the covid-19 pandemic.
Big impact on US economy
The National Association of Home Builders (NAHB) report examines the economic impact of building new homes, both on employment and revenue. The NAHB looked at two types of new builds – single-family homes and apartments – as well as refurbishment.
In the case of single-family homes, the study found that each unit creates 2.9 jobs, directly and indirectly. In terms of tax revenue for local, state and national governments, every new single-family home generates US$129,647. The report bases its findings on an average build value of US$421,000.
Surge in new-home builds
Prior to the covid-19 crisis, new home construction was already powering ahead. “Housing was on the rise with January and February new homes sales posting their highest reading since the Great Recession,” said NAHB Chairman Dean Mon.
He pointed out that “demand is clearly there”. He also believes that “housing will play its traditional role of helping to lead the economy later in 2020 when the pandemic subsides”.
Wide employment scope
One of the biggest advantages that new-home builds offer is their scope for the job market and by extension, the US economy. Residential construction creates employment directly for the builders themselves and has a wide-reaching effect on other sectors. These include providers such as building material suppliers, electricians and other professionals plus transporters.
At the non-construction end, new homes create jobs for architects and real estate agents as well as interior designers and gardeners. The legal and financial sectors also benefit making residential construction a major driver in the job market.
Construction as usual
New homes will also drive the US economy forward over the next few months because residential construction is an “essential infrastructure business”. The US Department of Homeland Security ruled at the end of March that building work could continue in states with stay-at-home policies. This includes construction of single-family homes and apartments.
While this doesn’t necessarily mean that building work will continue across the US during the current covid-19 lockdown, analysts expect construction to move forward in many states. The industry has prepared tailored coronavirus plans for building sites to safeguard health and safety for employees.
More demand for single-family homes
Real estate market analysts believe that the demand for larger homes will rise in the wake of covid-19 confinement. Families now value space more than ever, particularly outdoor, and many will seriously consider upsizing to a detached home.
Properties on large plots will be highly sought-after as part of new social distancing practice. In addition, safe environments will be more in demand, particularly among older demographics and families. Real estate agents report a surge in interest in single-family homes in the wake of confinement. This spike in demand comes from potential homeowners as well as renters.
As the US economy moves into the next stage, residential construction looks set to be at the forefront. Its economic impact coupled with strong consumer demand makes investment in new-home packages more attractive.
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