As we swing into the new year – an election year, no less – the state of the American economy is very much at the forefront of our ongoing national discussion. One aspect of the American economy that has recently been left out of much of that discussion, despite its prominence in prior years, is the residential housing construction market. It shouldn’t be.

Any study of the economy will reveal how complicated it can be to isolate any one element as being a true bellwether of economic health, but there are a number of figures that indicate that the state of America’s residential housing construction market is very closely tied to the overall health of the American economy.

An important term to consider is the phrase “housing starts.” This phrase measures the number of times that construction has been begun on a new home over a fixed period. So, for example, when the U.S. Department of Housing and Urban Development states that there were 1,149,000 housing starts in 2015, that means that construction was started on 1,149,000 new homes or apartments last year. This is great news since that number of housing starts is 6.4% higher than what occurred in 2014 and brings the level of housing starts back into pre-recession levels.

That the housing market is growing back to levels that it hasn’t reached in years is certainly a good thing, but what does all this growth mean for the economy? Quite a few things, actually, and almost all of them are good. In 2014, Robert Dietz, an economist for the National Association of Home Builders (NAHB), said that the increased demand for housing construction and renovation had resulted in the creation of 274,000 jobs over a two and half year span. The financial impact of housing construction and renovation is even more impactful than that figure suggests. The NAHB also estimates that the construction of 1,000 homes is enough to create:

  • 2,970 jobs
  • Wages of $162 million
  • Business income of $118 million
  • Taxes and revenues of $111 million paid to local, state and federal governments

That’s a significant impact on a community. Admitting that it’s important to keep market growth in perspective, economist Steven Ricchiuto recently said, “It’s a hell of a rebound in housing, there’s no denying it.”

There may still be a way to go for the American economy to be as healthy as it once was, but these are promising signs. Prior to the recession, home ownership was seen as not only a great personal investment but also the foundation of a strong economy. These figures suggest that the housing market – and the economy with which it’s so intricately intertwined – are recovering. The result is that buying, constructing, or renovating a home is once again a viable option for many Americans, an option that helps to drive job growth, wage generation and government funding. In short, it is an option that not only contributes to a growing, strengthening economy but also gives all of us hope in the coming years.