When you buy something simple, like a sweater, the price tag is just the beginning of its economic impact. That one purchase supports far more than the store itself. There’s the landlord paying taxes and insurance, the people who staff and clean the shop, the parking attendants, even the restaurant next door that benefits from the foot traffic. Every dollar spent ripples out into the community in ways we often don’t even notice.
Real estate works in the very same way—but on a much larger scale.
So, what happens when a home sells for $1 million? On average, that single transaction generates at least $250,600 in additional economic activity—and that doesn’t even include the sale price itself. This comes from things like real estate commissions, legal and appraisal fees, moving expenses, renovations, landscaping, new furniture, and all the countless services that go hand in hand with a move.
This is what economists call the multiplier effect: direct spending plus the ripple effect of that spending as it circulates through the economy. Professionals and businesses involved in the home sale earn income, spend locally, and contribute to tax revenues. And the cycle continues.
For higher-priced homes, the impact is even greater. Affluent buyers are more likely to invest in remodeling, luxury furnishings, interior designers, and high-end landscaping—all of which support local jobs and businesses. While the resale price of an existing home doesn’t directly count toward GDP (since the home was built previously), all of these connected services and purchases certainly do. For new construction, the full value is counted because it represents brand-new production.
Here’s why this matters: housing is a cornerstone of our economy. Right now, we’re seeing about 4 million home sales a year—roughly 20% below the “normal” level. That means we’re also operating below the full potential of what housing could be contributing to GDP growth. For context, housing already makes up 15–18% of U.S. GDP, and by the end of 2024, the value of U.S. residential real estate was an astonishing $49.7 trillion.
When you step back and look at the big picture, it’s clear: every home sale doesn’t just change the life of the buyer and seller—it fuels a powerful chain reaction that strengthens communities and drives the economy forward.
