Real estate also refers to producing, buying and selling real estate. Real estate affects the U.S. economy by being a critical driver of economic growth.
Construction of new buildings is a component of gross domestic product. It includes both residential, commercial, and industrial buildings. In 2018, real estate construction contributed $1.15 trillion to the nation's economic output. That's 6.2% of U.S. gross domestic product. It's more than the $1.13 trillion in 2017 but still less than the 2006 peak of $1.19 trillion. At that time, real estate construction was a hefty 8.9% component of GDP.
New home building is a critical category. It includes the construction of single-family homes, townhouses, and condominiums. The National Association of Home Builders provides monthly data on home sales and average prices. The data on new home sales is a leading economic indicator.3 It takes four months to establish a trend for new houses sold.
Real estate agents assist homeowners, businesses and investors buy and sell all four types of properties. The industry is typically divided up into specialists that focus on one of the types.
Sellers' agents help find buyers through either the Multiple Listing Service or their professional contacts. They price your property, using comparative listings of recently sold properties known as "comps." The can help you spruce up your property so it will look its best to customers. They assist in negotiations with the buyer, helping you get the highest price possible. Here are more sellers' agent services.
Buyers' agents provide similar services for the home purchaser. They know the local market. That means they can find a property that meets your most important criteria. They also compare prices, called "doing comps." It allows them to guide you to areas that are affordable. Buyers' agents negotiate for you, pointing out reasons why the seller should accept a lower price. They help with the legalities of the process, including title search, inspection and financing.
Real estate agents who want to increase their professionalism become REALTORS®. The National Association of REALTORS® provides monthly reports on the number of homes resold and their average price. It's a better indicator of the health of the overall housing industry than new home construction.
That's because new home builders can be overenthusiastic about future sales and overbuild. They can also cut prices to force sales. Individual homeowners must follow the market's supply and demand. They don't have the clout to manipulate the market. NAR provides the current housing market statistics.
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