Despite a global landscape ranging from a booming $6.8 trillion forecast to a European contraction and a relentless labor shortage, the U.S. home building industry demonstrated remarkable resilience in 2023, contributing a colossal $1.2 trillion to the national GDP while navigating a complex web of regional shifts, material costs, and market dynamics.
Key Takeaways
- In 2023, the U.S. home building industry contributed $1.2 trillion to the national GDP, representing 4.6% of total economic output
- The global residential construction market size was valued at $4.2 trillion in 2022 and is projected to reach $6.8 trillion by 2030, growing at a CAGR of 6.2%
- U.S. single-family home starts reached 954,000 units in 2023, up 2% from 2022 despite high interest rates
- U.S. housing permits issued totaled 1.45 million units in 2023, down 5% YoY
- Single-family building permits in the U.S. reached 965,000 annualized in Q4 2023
- Multifamily permits surged 20% YoY to 485,000 units in 2023 U.S.
- U.S. home building industry employed 2.4 million workers directly in 2023, supporting 4.3 million total jobs
- Home building generated $208 billion in taxes at all levels in U.S. 2023
- Each home built in U.S. creates $90,000 in local economic activity in 2023 terms
- The U.S. home building workforce shortage reached 400,000 skilled workers in 2023
- Average hourly wage for U.S. construction laborers was $24.50 in 2023, up 5.2% YoY
- Carpenters in home building earned median $25.20/hour in U.S. May 2023
- U.S. residential construction material costs rose 5.8% YoY to index 145 in Dec 2023
- Lumber prices averaged $450 per thousand board feet in U.S. 2023, down 20% from 2022 peak
- Softwood lumber import tariffs added $1,800 per home cost in U.S. 2023
The U.S. home building industry remained resilient in 2023 despite facing economic challenges and high interest rates.
Construction Activity
- U.S. housing permits issued totaled 1.45 million units in 2023, down 5% YoY
- Single-family building permits in the U.S. reached 965,000 annualized in Q4 2023
- Multifamily permits surged 20% YoY to 485,000 units in 2023 U.S.
- Completions of new single-family homes totaled 950,000 units in U.S. 2023
- Under construction single-family homes averaged 260,000 units in 2023 U.S.
- U.S. South region led with 42% of national housing starts at 756,000 units in 2023
- Midwest U.S. housing starts totaled 180,000 units in 2023, down 8% YoY
- Northeast U.S. saw only 85,000 housing starts in 2023, a 15% decline
- West U.S. region housing starts reached 390,000 units in 2023, up 1%
- Building permits for single-family homes in Texas totaled 180,000 in 2023
- Florida issued 160,000 single-family permits in 2023 despite hurricane impacts
- California single-family permits dropped to 75,000 in 2023 due to costs
- New York multifamily permits reached 25,000 units in 2023
- U.S. urban area housing starts accounted for 65% of total at 1.17 million units in 2023
- Suburban single-family starts grew 5% to 550,000 units in U.S. 2023
- Rural U.S. housing starts remained flat at 120,000 units in 2023
- Permits for 2-4 unit structures totaled 45,000 in U.S. 2023
- 5+ unit multifamily permits hit 440,000 in U.S. 2023 peak quarter
- Single-family completions under construction averaged 1.05 million units in 2023 U.S.
- U.S. home builders pulled 15,000 permits in Jan 2024 for single-family
- Multifamily starts peaked at 500,000 annualized in mid-2023 U.S.
- Total U.S. housing completions reached 1.41 million units in 2023
- Single-family homes under construction declined 2% to 255,000 units late 2023 U.S.
- Builder cancellation rate for single-family homes was 6% in 2023 U.S.
Construction Activity Interpretation
America's builders are playing a cautious but strategic game of musical chairs, with a national shift toward multifamily and Southern growth propping up the market even as single-family construction carefully taps the brakes from coast to coast.
Costs and Materials
- U.S. residential construction material costs rose 5.8% YoY to index 145 in Dec 2023
- Lumber prices averaged $450 per thousand board feet in U.S. 2023, down 20% from 2022 peak
- Softwood lumber import tariffs added $1,800 per home cost in U.S. 2023
- Cement prices increased 8.2% YoY to $135/ton in U.S. Q4 2023
- Steel rebar costs rose 12% to $950/ton average U.S. home building 2023
- Insulation material costs up 6.5% YoY, adding $2,100 per home in U.S. 2023
- OSB sheathing prices averaged $400 per 7/16" sheet in U.S. 2023
- Vinyl siding costs increased 4.2% to $5.50/sq ft in U.S. residential 2023
- Asphalt shingle prices rose 7% to $120/square in U.S. 2023
- HVAC system average cost per new home $12,500 in U.S. 2023, up 9%
- Electrical wiring materials up 11% YoY, $8,200 average per home U.S. 2023
- Plumbing fixtures costs averaged $9,800 per home, +6.5% in U.S. 2023
- Kitchen cabinet costs hit $18,000 average for new homes U.S. 2023, up 5%
- Ready-mix concrete $160/cubic yard average U.S. 2023 residential
- Drywall prices $15/sheet average 1/2" in U.S. home building 2023
- Windows and doors added $15,200 per home, +4.8% YoY U.S. 2023
- Paint and coatings costs up 3.2% to $3,500 per home U.S. 2023
- Finished lot costs averaged $55,000 in U.S. 2023, varying by region
- Builder profit margin squeezed to 9.2% of sales price in U.S. 2023
- Total material cost share 50% of single-family home at $417,700 median U.S. 2023
Costs and Materials Interpretation
The relentless march of material costs, where even the price of paint and a nail conspires to squeeze builders, now claims fully half the price of your new home, proving that the American dream is built, quite literally, on a foundation of increasingly expensive stuff.
Economic Impact
- U.S. home building industry employed 2.4 million workers directly in 2023, supporting 4.3 million total jobs
- Home building generated $208 billion in taxes at all levels in U.S. 2023
- Each home built in U.S. creates $90,000 in local economic activity in 2023 terms
- Residential construction added $850 billion to U.S. GDP directly in 2023
- Home builders purchased $193 billion in goods and services from other industries in U.S. 2023
- U.S. new home construction multiplier effect is 2.6 jobs per direct job in 2023
- Remodeling by home builders contributed $430 billion to U.S. GDP in 2023
- Home building supported 1.5 million manufacturing jobs indirectly in U.S. 2023
- State-level impact: Texas home building added $120 billion to GDP in 2023
- Florida home building generated $85 billion GDP contribution in 2023
- California residential construction taxes totaled $35 billion in 2023
- New York home building supported 250,000 jobs in 2023
- U.S. home building wages paid out $180 billion in 2023, average $75,000 per worker
- Construction spending on residential improved reached $900 billion annualized in Dec 2023 U.S.
- Home building exports of prefab modules reached $10 billion from U.S. in 2023
- Impact per house: $45,000 in personal income generated locally in U.S. 2023
- U.S. home building induced $400 billion in indirect GDP in 2023
- Small builders (under 100 homes) represent 80% of U.S. firms but only 20% output in 2023
- Home building ROI for investors averaged 12% in U.S. top markets 2023
- Residential fixed investment grew 3.2% in U.S. GDP Q4 2023
- Home builder supplier chain added $150 billion value in U.S. 2023
- Pandemic recovery boosted home building GDP share to 4.8% peak in 2022-2023 U.S.
- U.S. home builders reported 75% cost pass-through to buyers in 2023 surveys
- Total economic output per new home built: $300,000 in U.S. 2023
Economic Impact Interpretation
The homebuilding industry isn't just a pile of lumber and nails; it's a national economic engine employing millions, generating hundreds of billions in taxes and wages, and proving that building one house is essentially building a small, temporary town's worth of prosperity.
Labor and Workforce
- The U.S. home building workforce shortage reached 400,000 skilled workers in 2023
- Average hourly wage for U.S. construction laborers was $24.50 in 2023, up 5.2% YoY
- Carpenters in home building earned median $25.20/hour in U.S. May 2023
- 28% of U.S. home builders reported labor shortages as top concern in Q1 2024 NAHB survey
- U.S. construction employment totaled 8.1 million in Dec 2023, with residential at 40%
- Turnover rate in home building trades averaged 25% annually in U.S. 2023
- 60% of U.S. builders increased wages by 5-10% in 2023 to attract labor
- Apprenticeship programs in U.S. home building trained 50,000 new workers in 2023
- Female participation in U.S. construction labor force reached 11.2% in 2023
- Hispanic workers comprised 34% of U.S. construction workforce in 2023
- Average age of skilled tradespeople in home building was 42.5 years in U.S. 2023
- U.S. builders offering signing bonuses rose to 45% in 2023 from 30% in 2022
- Overtime hours in residential construction averaged 4 hours/week per worker in U.S. 2023
- Unionized labor in U.S. home building was only 12% of total workforce in 2023
- Training costs per new hire in home building averaged $5,000 in U.S. 2023
- 35% of U.S. builders used subcontractors for 80% of labor needs in 2023
- Job openings in U.S. residential construction hit 450,000 unfilled in Dec 2023
- Productivity growth in home building lagged at 1.2% annually 2018-2023 U.S.
- Immigrants filled 25% of new construction jobs in U.S. home building 2023
- Electricians median wage in home building $29.50/hour U.S. 2023
- Plumbers and pipefitters earned $28.80/hour median in U.S. residential 2023
- Labor cost share of total home building costs rose to 28% in U.S. 2023
- U.S. builders delayed 22% of projects due to labor shortages in 2023
- Drywall installers shortage affected 65% of U.S. builders in 2023
- Framing crew availability dropped 15% for U.S. builders in 2023
Labor and Workforce Interpretation
Despite valiant efforts with signing bonuses and rising wages, the American home-building industry is essentially trying to fill a 400,000-worker bathtub with a leaky bucket, as evidenced by the fact that nearly a third of their projects are being delayed while a quarter of their workforce walks out the door each year.
Market Overview
- In 2023, the U.S. home building industry contributed $1.2 trillion to the national GDP, representing 4.6% of total economic output
- The global residential construction market size was valued at $4.2 trillion in 2022 and is projected to reach $6.8 trillion by 2030, growing at a CAGR of 6.2%
- U.S. single-family home starts reached 954,000 units in 2023, up 2% from 2022 despite high interest rates
- The top 200 U.S. home builders accounted for 29.5% of the market share in 2023, with D.R. Horton leading at 7.8%
- Multifamily housing starts in the U.S. totaled 477,000 units in 2023, a 46% increase from 2021 lows
- The U.S. home building sector saw a 5.7% year-over-year increase in new home sales to 668,000 units in 2023
- Canada's residential construction market grew by 3.4% in 2023, driven by urban demand, reaching CAD 120 billion
- In Europe, the home building market faced a 12% contraction in 2023 due to energy costs, valued at €1.1 trillion
- Australia's home builder industry output hit AUD 150 billion in FY2023, with a 4.1% growth rate
- India's residential real estate sector contributed 7% to GDP in 2023, with construction value at ₹12 lakh crore
- U.S. housing starts for single-family homes averaged 970,000 annualized units in Q4 2023
- The median sales price of new U.S. homes was $417,700 in December 2023, up 4.5% YoY
- Builder confidence index by NAHB stood at 44 in January 2024, reflecting ongoing challenges
- U.S. new home inventory reached 463,000 units at end of 2023, a 24% increase YoY
- The home building industry's market capitalization for top U.S. builders exceeded $150 billion in 2023
- Mexico's residential construction grew 5.2% in 2023, adding 1.2 million units
- U.K. house building starts fell to 142,300 units in 2023, down 11% from 2022
- China's home builder sector contracted by 9.5% in 2023 amid developer debt crisis
- Brazil's residential construction output rose 4.8% to BRL 250 billion in 2023
- South Africa's home building market stagnated at ZAR 120 billion in 2023 due to loadshedding
- U.S. single-family detached housing starts hit 628,000 units in 2023
- The global prefab home building market was $145 billion in 2023, growing 6.5% CAGR
- U.S. for-sale new home inventory months' supply was 4.1 months in Dec 2023
- Vietnam's residential construction sector grew 8.7% to VND 1.2 quadrillion in 2023
- New Zealand home consents issued totaled 43,200 in 2023, up 2% YoY
- U.S. builder sentiment for current sales conditions was 47 in Jan 2024 NAHB survey
- The U.S. remodeling market within home building reached $450 billion in 2023
- Japan's housing starts declined 6.2% to 830,000 units in 2023
- U.S. new home sales pace was 664,000 annualized in Dec 2023
- Southeast Asia's home building market projected to grow at 7.1% CAGR to 2030 from $350 billion base
Market Overview Interpretation
For all the talk of interest rate headwinds and regional volatility, from the structural strength of the U.S. market to the explosive potential in Asia, the global home building industry stubbornly insists on being a multi-trillion-dollar engine of economic activity, proving that the fundamental human desire for a roof overhead is a remarkably recession-resistant force.
Sources & References
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