Economists and other housing experts have long recognized the link between homeownership rates and the overall health of the U.S. economy in both the domestic and international arenas. A decline in homeownership rates typically signals a mismatch between housing prices and the income of potential homebuyers; moreover, it produces ripple effects felt throughout all sectors of the economy. The most immediate result of the housing price/income mismatch is that entry-level buyers are eliminated from the market and construction activity slows. Ramifications extend not only to societal impacts associated with quality of life but also to the Gross Domestic Product GDP and the unemployment rate. According to Harvard University's Joint Center for Housing Studies, residential construction and investment combined with housing consumption and related expenditures accounts for 20 percent of Gross Domestic Product annually.
In recognition of the role of housing in the U.S. economy and the housing cost/housing price relationship, the White House in 1994 convened representatives from all segments of the nation's construction industry to consider a broad set of National Construction Goals. As a result of that meeting, the residential segments of the construction industry assigned highest priority to the two following goals:
- To reduce production costs through improved technology.
- To improve product durability.