Every time you buy a sweater, the sale price is just one component of the economic impact of that purchase:  the retail space has a landlord who pays real estate taxes, operational costs, insurance, there are salaries (and taxes paid) for the people who clean the store, staff it, design it, style it, paint it, etc, there is parking outside that collects fees for the town (and employs someone to enforce the law), the store attracts people to have lunch next door and so on and so on). Real estate is an enormous driver of economic activity. 

How much economic activity is generated in the US when a home sells for $1 million (the higher the price, the larger the impact)? The estimated economic activity generated is a minimum of $250,600, not including the sale price itself. The total economic activity is driven by the median economic impact per home sale and has a multiplier effect consisting of direct spending and a much broader ripple effect throughout the economy. This includes real estate commissions, appraisal fees, legal fees, and title insurance, which all deliver tax revenues.

Then there are moving services, furniture, decorating, painting, wallpapers, etc, new appliances or systems, maybe some (or complete) renovations and additions. As all these real estate professionals and home-related businesses earn income, they spend that money locally, creating a ripple effect of spending throughout the economy and this also generates sales taxes.

Affluent homebuyers are often likely to spend more on high-end remodeling, designers, architects, new furniture, and landscaping, which further boosts economic activity in their local community. The more expensive the home, the higher all these costs are. And the more they contribute to overall GDP. The sale price of an existing home does not directly contribute to GDP because the house was built in a prior year. The economic activity comes only from the services and ancillary purchases surrounding the sale. The construction of a new home is counted in its entirety in the GDP because it represents new production.

Housing is critically important to our economy and right now we are trading around 4 million homes per year, roughly 20% below normal which may give us hope that GDP growth could soar with an improvement in the volume of home sales. Housing contributes over 15-18% to U.S. GDP.  The value of U.S. residential real estate was approximately $49.7 trillion at the end of 2024.