A big part of the economic recovery on Oahu this year will be from the revival in residential construction, based on an industry economic study presented yesterday.

Elliot Eisenberg, senior economist for the National Association of Home Builders, told a group of local business and government leaders that home construction is one of the largest contributors to local economies in terms of generating jobs, taxes and spending.

Eisenberg said building homes on Oahu produced roughly $450 million last year in income, spending and tax revenue directly and indirectly.

The figure is based on 1,036 building permits for homes on Oahu last year that Eisenberg plugged into an economic model the Washington, D.C.-based trade association uses to compute job income, spending and taxes generated by construction and related services — down to the electricity used by occupants of new homes.

Such industry-related spending is surging this year, given that the number of residential building permits through September was 1,578, or 52 percent higher than permits for all of 2009, according to the University of Hawaii Economic Research Organization.

The increase suggests that at least an additional $230 million will have flowed into Oahu’s economy this year from home-building.

Last year’s permit total was a recent low, down from 1,943 permits in 2008. Even with the rise this year to perhaps close to the same number as 2008, the industry’s economic impact will still be less than half of what it was when home construction peaked in 2005, when there were 3,821 residential permits.

Eisenberg’s presentation was sponsored by the Building Industry Association-Hawaii and the state’s largest homebuilder, Castle & Cooke Homes Hawaii. It was the first time, according to the BIA, that the economic impact model of the National Association of Home Builders was used to calculate the impact of the industry on Oahu.

The model took into account Oahu home prices, property taxes, fees and other local data.

Carl Bonham, executive director of the University of Hawaii Economic Research Organization, said a couple minor pieces of the study were questionable, such as counting the spending by occupants of new homes as an industry-related economic contribution, because many of the people buying new homes were already contributing to the economy. But generally, Bonham said, the numbers used for construction spending — including labor and the ripple effect of money that construction workers spend on other things — present a fair picture.

"I think the basic story is right," he said. "The multiplier (impact) is big for construction."

Eisenberg said that nationally, home-building is among the top four industries — along with health care, automobile manufacturing and government — with the biggest multiplier effects, meaning that direct spending trickles into other areas where the money is spent again and again.

In Hawaii, tourism is among this group of high-multiplier industries, though home-building still is in the top group.

Eisenberg also told government leaders at the meeting, including several legislators and Mayor Peter Carlisle, that based on his calculations, government fees and taxes from home-building more than pay for the added expenses created for government, such as the need for more public serv-ices.