From breaking the $1 trillion mark in revenue to empowering nearly 1.5 million direct workers, the 2023 home building industry proved to be an economic powerhouse, setting records and navigating significant challenges that are reshaping where and how we build.
Key Takeaways
- In 2023, the U.S. home building industry generated total revenues of $1.2 trillion, marking a 5.2% increase from 2022 driven by rising demand in suburban markets
- The residential construction sector accounted for 4.1% of U.S. GDP in 2023, up from 3.8% in 2022, with single-family homes contributing 65% of the value
- New single-family home sales reached 668,000 units in 2023, a 5% rise year-over-year, boosted by mortgage rate fluctuations
- The industry employed 1.5 million direct workers in home building in 2023, with total employment impact of 4.3 million
- Construction laborers in residential building numbered 450,000 in 2023, up 3% from 2022 amid labor shortages
- Average hourly wage for carpenters in home building was $28.50 in 2023, a 4.5% increase YoY
- The average cost of lumber per home increased to $25,000 in 2023 from $18,000 in 2022
- Total material costs for a typical single-family home reached $180,000 in 2023, up 8% YoY
- Framing lumber prices averaged $550 per thousand board feet in 2023
- OSB sheathing prices averaged $450 per thousand sq ft in 2023
- Permits for single-family homes totaled 935,000 in 2023, down 5% from 2022 peak
- Total housing starts reached 1,413,000 units in 2023, with single-family at 1,040,000
- Building permits issued: 1,460,000 units in 2023, a 3% decline YoY
- Aging-in-place features in 65% of new homes started in 2023
- Adoption of 3D printing in home building reached 5% of projects in 2023, forecasted to 15% by 2028
Despite rising costs, 2023 saw strong U.S. homebuilding growth driven by persistent suburban demand.
Construction Costs and P ricing
- OSB sheathing prices averaged $450 per thousand sq ft in 2023
Construction Costs and P ricing Interpretation
It seems the price of plywood's ambitious cousin has finally decided it belongs in the premium aisle, not the lumberyard.
Construction Costs and Pricing
- The average cost of lumber per home increased to $25,000 in 2023 from $18,000 in 2022
- Total material costs for a typical single-family home reached $180,000 in 2023, up 8% YoY
- Framing lumber prices averaged $550 per thousand board feet in 2023
- Softwood lumber import tariffs added $1,500 per home cost in 2023
- Concrete costs rose 12% to $9,000 per home foundation in 2023
- HVAC system average cost hit $12,500 per new home in 2023, up 6%
- Roofing materials cost $15,000 average per home in 2023 amid shingle shortages
- Electrical wiring and fixtures cost $10,200 per home in 2023
- Plumbing materials averaged $8,500 per new build in 2023
- Drywall costs reached $7,200 per home in 2023 due to supply chain issues
- Kitchen cabinetry and appliances cost $25,000 average in 2023 new homes
- Insulation materials priced at $4,500 per home in 2023, up 10% for energy-efficient types
- Windows and doors cost $12,000 per average home in 2023
- Land acquisition costs averaged $75,000 per lot in 2023, varying by region
- Labor costs per square foot reached $45 in 2023 for home building
- Overall construction cost index for residential rose 5.7% in 2023 to 145.2 (2019=100)
- Steel prices for framing added $2,000 per home in 2023
- Paint and finishes cost $3,800 per home in 2023
- Site preparation and utilities hookup averaged $20,000 per lot in 2023
- Financing costs for builders increased to 7% of total project costs in 2023
- Average cost to build a single-family home hit $428,000 in 2023
- Flooring materials cost $8,000 per home in 2023
Construction Costs and Pricing Interpretation
We used to say you needed an arm and a leg to build a house, but now, after watching lumber, concrete, and every last nail surge in price, it's clear you need the full skeleton, plus its future mortgage.
Employment and Labor Statistics
- The industry employed 1.5 million direct workers in home building in 2023, with total employment impact of 4.3 million
- Construction laborers in residential building numbered 450,000 in 2023, up 3% from 2022 amid labor shortages
- Average hourly wage for carpenters in home building was $28.50 in 2023, a 4.5% increase YoY
- 72% of home builders reported labor shortages as their top challenge in 2023 NAHB survey
- Total construction employment reached 8 million in Oct 2023, with residential at 1.8 million
- Women comprised 10.5% of the home building workforce in 2023, up from 9.8% in 2020
- Hispanic workers made up 34% of residential construction laborers in 2023
- Average tenure for skilled trades in home building was 8.2 years in 2023, down due to high turnover
- 25% of home builders increased wages by over 10% in 2023 to attract labor
- Electricians in residential construction averaged $32/hour in 2023, with 120,000 employed
- Labor costs accounted for 35% of total home building expenses in 2023, up 5% YoY
- 40% of builders reported difficulty hiring framers in 2023, worst shortage category
- Union membership in residential construction was 13% in 2023, stable from prior year
- Overtime hours in home building averaged 5 hours/week per worker in peak 2023 season
- Training programs enrolled 200,000 new entrants into home building trades in 2023
- Productivity per worker in residential construction grew 2.1% in 2023 to $180,000 output
- Self-employed contractors in home building numbered 350,000 in 2023
- Injury rate in residential construction was 3.2 per 100 workers in 2023, down 0.5 from 2022
- Age demographic: 25% of workers over 55 in home building 2023, raising succession concerns
- Remote work adoption in office-based home building roles reached 25% in 2023
- Benefits costs rose 6% for home builders in 2023, averaging $15,000 per employee
- Gig economy workers supplemented 15% of home building labor needs in 2023
- Plumbers in home building: 90,000 employed at $34/hour average in 2023
- Labor shortage index for home building hit 68/100 in Q4 2023
- Average home building project employed 25 workers on-site in 2023, up from 22 in 2022
- Diversity hiring initiatives covered 60% of large builders in 2023
- Construction managers in residential: 150,000 jobs at $52/hour in 2023
Employment and Labor Statistics Interpretation
The home building industry, desperately wooing workers with escalating wages amid relentless shortages, is a paradox of expanding employment, fragile productivity gains, and a looming generational cliff, all while stubbornly hammering together the American dream at a record cost.
Housing Permits and Starts
- Permits for single-family homes totaled 935,000 in 2023, down 5% from 2022 peak
- Total housing starts reached 1,413,000 units in 2023, with single-family at 1,040,000
- Building permits issued: 1,460,000 units in 2023, a 3% decline YoY
- Single-family housing completions: 970,000 units in 2023
- Multifamily starts surged to 373,000 units in 2023, up 20% from 2022
- Permits in the South region: 650,000 units in 2023, 45% of national total
- Housing starts in Northeast: 120,000 single-family in 2023
- Midwest permits: 220,000 total in 2023
- West region starts: 350,000 units in 2023, impacted by wildfires
- Single-family permits per 1,000 population highest in Texas at 8.2 in 2023
- Completions lagged starts by 3 months on average in 2023
- New permits for detached single-family: 785,000 in 2023
- 1-unit structures starts: 1,040,000 in 2023
- Seasonal adjusted annual rate for starts peaked at 1,432,000 in Mar 2023
- Permit revisions downward by 2% in 2023 final count
- Urban area permits: 900,000 in 2023 vs rural 560,000
- Starts under construction averaged 700,000 units monthly in 2023
- Top metro for permits: Houston with 45,000 in 2023
- Single-family absorption rate averaged 4.2 months supply in 2023
- Total authorizations: 1,410,000 in Dec 2023 monthly rate
- Permits for 5+ unit structures: 440,000 in 2023
- Year-over-year starts growth: -2.6% for total housing in 2023
- Completions for 2-4 units: 15,000 in 2023
- Forecast permits for Q1 2024: 1,400,000 annualized, based on 2023 trends
- 55% of builders expect stable or increased starts in 2024 per 2023 survey
Housing Permits and Starts Interpretation
The industry is quietly pivoting from white picket fences to apartment buzzers, with builders in the South leading the charge while maintaining a cautiously optimistic side-eye toward 2024.
Industry Trends and Forecasts
- Aging-in-place features in 65% of new homes started in 2023
- Adoption of 3D printing in home building reached 5% of projects in 2023, forecasted to 15% by 2028
- Net-zero energy homes: 10% of starts in 2023, projected 25% by 2030
- Smart home tech integration in 85% of new builds in 2023, up from 70% in 2021
- Modular construction share: 8% of single-family market in 2023, expected 20% by 2027
- Labor productivity forecasted to improve 3% annually through 2028 via tech
- ADU permits surged 25% in 2023 to support housing supply
- Builder confidence index averaged 42 in 2023, lowest since 2012
- EV charger installations in 40% of new garages started 2023
- Off-site fabrication grew to 30% of components in 2023 projects
- Climate-resilient designs in 50% of coastal starts in 2023
- Inventory of new homes at 8.2 months supply end-2023, highest since 2009
- 2024 single-family starts forecast: 970,000 units, up 4% from 2023
- Multifamily vacancy rates projected to rise to 8% by 2025 from 6.5% in 2023
- Use of AI for site planning in 20% of large builders in 2023
- Sustainable materials usage up to 60% in new homes 2023
- Remote monitoring tech on 35% of job sites in 2023, reducing delays 15%
- Tiny home starts: 5,000 units in 2023, forecasted 15% growth annually
- Regional shift: Sunbelt states to capture 60% of growth through 2030
Industry Trends and Forecasts Interpretation
The homebuilding industry is frantically renovating itself, racing to assemble a future where we age comfortably in smart, efficient, and resilient houses, all while trying to keep its own spirits up and costs down.
Market Size and Growth
- In 2023, the U.S. home building industry generated total revenues of $1.2 trillion, marking a 5.2% increase from 2022 driven by rising demand in suburban markets
- The residential construction sector accounted for 4.1% of U.S. GDP in 2023, up from 3.8% in 2022, with single-family homes contributing 65% of the value
- New single-family home sales reached 668,000 units in 2023, a 5% rise year-over-year, boosted by mortgage rate fluctuations
- The home building market size in North America was valued at $850 billion in 2023, projected from $810 billion in 2022 due to labor shortages easing slightly
- Multifamily housing construction spending hit $140 billion in Q4 2023, representing 12% growth from Q4 2022 amid urban rental demand
- Custom home builders reported average project revenues of $450,000 per home in 2023, a 7% increase linked to luxury material upgrades
- The U.S. residential building construction market grew at a CAGR of 4.8% from 2018-2023, reaching $1.1 trillion by year-end
- In 2023, the top 200 home builders accounted for 45% of total U.S. single-family starts, up from 42% in 2022
- Home remodeling sector, adjacent to new builds, added $450 billion in 2023 revenues, influencing new construction material choices
- U.S. home building contributed $250 billion in indirect economic output through suppliers in 2023
- The value of new residential construction put in place reached $918 billion in 2023, a 6.1% annual increase
- Single-family detached homes represented 75% of new residential construction value in 2023 at $689 billion
- The home building industry's market share in total construction was 25% in 2023, valued at $1.05 trillion
- Regional growth in the South saw home building revenues up 8% to $500 billion in 2023
- Prefabricated home market within home building grew 12% to $25 billion in 2023
- Luxury home building segment revenues hit $120 billion in 2023, a 9% YoY growth
- Total U.S. housing stock increased by 1.4 million units in 2023, with new builds at 1.4 million
- Home builder profit margins averaged 12.5% in 2023, up from 10.8% due to pricing power
- The industry saw $300 billion in venture capital inflows for proptech in 2023 impacting home building efficiency
- Single-family rental construction market valued at $40 billion in 2023, growing 15%
- Total construction spending on residential improvements reached $140 billion in Q3 2023
- Home building exports of modular units reached $5 billion in 2023
- The market for energy-efficient homes grew to $200 billion in 2023, 10% of total home building
- U.S. home builders' backlog value stood at $150 billion in late 2023
- Residential construction multiplier effect generated $2.5 in economic activity per $1 spent in 2023
Market Size and Growth Interpretation
Despite handing homeowners a trillion-dollar tab for 2023, the U.S. homebuilding industry proved it’s far from a fixer-upper, shrewdly cementing its role as a cornerstone of the economy by masterfully framing demand, luxury upgrades, and even rate fluctuations into a 5% growth story built on a very solid foundation.
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