Jobs Impact of an Existing Home Purchase

The National Association of Realtors® estimates that one job is generated for every two home sales.  Using that ratio, 1,000 home sales generate 500 jobs.

The ratio is derived from the economic impact of an existing home sale. Each home sale contributes about sixty thousand dollars to the economy or Gross Domestic Product (GDP). The component measures of this figure are shown in the table below (full methodology page available).

Impact of Single Existing Home Purchase

Median Price $173,000

Real Estate Industries Related Industries
(Furniture/Gardening)
Local Economic
Multiplier
New Housing
Construction
Inducement
Total
Contribution
$15,570 + $5,235 + $9,987 + $27,738 = $58,529

GDP can be measured in three ways, one of which is the sum of all income1. Using the income concept and comparing GDP2 to the number of payroll workers in the US3, we find that the average income per employee was $113,000 in 2010.

This is an over-estimation of salary income since income can be earned from profits, rents, and other sources, however this gives us a ceiling to earnings per worker. Survey data show that full time US workers earned a median of $42,400 and average of $57, 4004 in 2009.

Putting these figures together reveals that every two home sales generate one job.

Income from two home sales: $117,058 Income from two home sales $117,058
Income per worker (GDP/worker): $113,000 Income per worker
(Average Earnings):
$57,400
Workers per two home sales: 1.04 Workers per two home sales: 2.04

 

Impact => 2 home sales = 1 job Impact => 2 home sales = 2 jobs

1 GDP can also be measured using what is called the expenditure approach or the value added approach. See
http://www.bea.gov/national/pdf/nipa_primer.pdf for details.
2 GDP ranged between $14.4 and $14.9 trillion in 2010 per the Bureau of Economic Analysis.
3 Payroll employment in 2010 ranged between 129 and 130 million per the Bureau of Labor Statistics (BLS)
4 BLS/Census Current Population Survey’s Annual Social and Economic Supplement 2010

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