While towering as a trillion-dollar economic powerhouse, the U.S. homebuilding industry in 2023 was a study in contrasts, navigating record spending alongside significant challenges like high interest rates and material cost volatility.
Key Takeaways
- In 2023, the U.S. homebuilding industry generated approximately $1.2 trillion in total economic output, supporting over 3.6 million jobs nationwide
- The single-family homebuilding sector accounted for 78% of all new residential construction value in 2022, totaling $325 billion
- U.S. residential construction spending reached a record $922 billion in 2023, up 8.5% from 2022
- Single-family housing starts totaled 980,000 units in 2023, down 10% YoY
- Total housing starts in the U.S. were 1.41 million units in 2023, a 6.5% decline from 2022
- Building permits for single-family homes fell 12% to 925,000 units in 2023
- Lumber prices for framing averaged $550 per thousand board feet in 2023, up 20% YoY
- Softwood lumber import volume reached 35 billion board feet in 2023
- Residential construction material costs rose 5.2% in 2023 to $140,000 per home
- U.S. construction employment totaled 8.1 million in 2023, up 2.5% YoY
- Homebuilding industry employed 1.1 million direct workers in 2023
- Carpenter employment in residential construction was 1.2 million in 2023
- Homebuilding multiplier effect supported 2.5 indirect jobs per direct in 2023
- Residential construction added $180 billion to GDP in 2024 forecast
- Housing starts projected at 1.45 million units for 2024, up 3%
The U.S. homebuilding industry is a massive economic engine despite facing headwinds from high interest rates.
Construction Costs and Materials
- Lumber prices for framing averaged $550 per thousand board feet in 2023, up 20% YoY
- Softwood lumber import volume reached 35 billion board feet in 2023
- Residential construction material costs rose 5.2% in 2023 to $140,000 per home
- OSB prices averaged $420 per 7/16" sheet in 2023, volatile due to supply
- Steel prices for rebar increased 15% to $750 per ton in 2023
- Concrete costs per cubic yard rose to $165 in 2023, up 8%
- Insulation material costs jumped 12% to $2.50 per sq ft in 2023
- Drywall prices averaged $18 per 4x8 sheet in 2023, stable after 2022 peak
- Shingle asphalt costs rose 7% to $115 per square in 2023
- HVAC equipment costs increased 9% to $12,000 average per home in 2023
- Window and door assemblies cost $15,000 avg per home, up 6% in 2023
- Electrical wiring costs rose to $8,500 per home in 2023, 10% increase
- Plumbing fixture costs averaged $7,200 per new home in 2023, up 5%
- Appliance bundle costs hit $9,800 for typical new home in 2023
- Paint and coatings costs increased 4% to $2,100 per home in 2023
- Flooring materials (hardwood, tile) averaged $11,000 per home, up 7% in 2023
- Cabinetry costs rose to $18,500 avg for kitchens in 2023 new builds
- Roofing material total cost per home $13,000 in 2023, up 6%
- Framing labor and material combined $45,000 per SF home in 2023
- Energy-efficient materials added 3-5% to costs, averaging $6,000 premium in 2023
- Copper wiring prices up 22% to $4.50/lb in 2023 impacting electrical
- Vinyl siding costs $4.50/sq ft avg in 2023, up 5%
- Brick and masonry costs $15/sq ft, rose 8% in 2023
- Solar panel installation added $25,000 avg but costs fell 10% in 2023
- Foundation concrete work $28,000 avg per home, up 9% in 2023
- Countertop quartz avg $65/sq ft in 2023 new homes
- Labor costs for skilled trades rose 6.5% to 35% of total build cost in 2023
- PEX plumbing pipe costs down 3% but fixtures up overall 5% in 2023
- LED lighting fixtures $3,500 avg per home, up 7% in 2023
- Landscaping and site work $15,000 avg, rose 10% in 2023 due to labor
Construction Costs and Materials Interpretation
The housing market is trying to build the American dream while being mugged by the lumber yard, held up by the electrician, and gently pickpocketed by every single supplier and sub-contractor along the way.
Economic Impact and Forecasts
- Homebuilding multiplier effect supported 2.5 indirect jobs per direct in 2023
- Residential construction added $180 billion to GDP in 2024 forecast
- Housing starts projected at 1.45 million units for 2024, up 3%
- New home sales forecast 720,000 units in 2024
- Home price growth expected at 2.5% in 2024 per FHFA index
- Mortgage rates forecasted to average 6.5% in 2024, impacting demand
- Construction spending growth 4.1% projected for residential in 2024
- Job growth in homebuilding 50,000 net new jobs forecasted 2024
- Affordability index to improve to 105 in 2024 Q4 forecast
- Multifamily starts peak at 500,000 then decline to 400,000 by 2025
- Builder confidence to rise to 55 avg in 2024 HMI
- Total economic impact of housing $2.1 trillion projected 2024
- Permits to stabilize at 1.5 million in 2024 forecast
- Remodeling spending $480 billion forecasted for 2024
- Inventory months' supply to 7.5 for new homes by end 2024
- Labor costs inflation 4.5% expected in construction 2024
- Material costs to fall 2% in 2024 due to supply normalization
- GDP contribution from residential fixed investment 4.0% in 2024
- Single-family starts to 1.05 million in 2024 projection
- Homeownership rate to 66.2% by 2025 forecast
- Recession risk 25% impacting homebuilding in 2024 per NAHB
- Tax revenue from homebuilding $60 billion annually projected
- EV charger installations in new homes to 20% by 2024
- Aging-in-place remodels to grow 10% in spending 2024
- Net operating income for builders to rise 5% in 2024 forecast
Economic Impact and Forecasts Interpretation
The homebuilding industry is set for a cautiously optimistic year, where modest growth in starts and sales must carefully navigate a tightrope of high mortgage rates, stubborn costs, and a looming recession threat, all while its immense $2.1 trillion economic impact proves that building a house remains one of the most reliable ways to build a nation.
Housing Supply and Demand
- Single-family housing starts totaled 980,000 units in 2023, down 10% YoY
- Total housing starts in the U.S. were 1.41 million units in 2023, a 6.5% decline from 2022
- Building permits for single-family homes fell 12% to 925,000 units in 2023
- Multifamily starts surged 35% to 440,000 units in Q1 2024 from prior year
- New home sales pace was 664,000 annualized in December 2023
- Existing home sales totaled 4.09 million in 2023, down 19% YoY, impacting new supply demand
- Homeownership rate reached 65.7% in Q4 2023, stable despite supply shortages
- Under-construction inventory for single-family homes was 237,000 units in Q4 2023
- Rental vacancy rate for new multifamily was 5.8% in 2023
- First-time buyer share of new home purchases was 28% in 2023
- Months' supply of new homes was 8.4 months in December 2023
- Housing completions reached 1.65 million units in 2023, up 5%
- Repeat buyer share in new homes was 72% in 2023 due to affordability issues
- Vacant homes for sale supply increased 10% to 1.2 million units in 2023
- Single-family for-sale inventory was 281,000 units in late 2023
- Homebuilder net positive rating for meeting demand was 45% in 2023 survey
- Total unsold new home inventory hit 476,000 units in Q4 2023
- Median days on market for new homes was 68 days in 2023, up from 50 in 2022
- Institutional investor share of new single-family purchases was 18% in 2023
- Housing affordability index averaged 98.3 in 2023, lowest since 2008
- New household formations totaled 1.3 million in 2023, outpacing starts
- Oversupply risk in multifamily was indicated by 15-month supply in Q4 2023
- Builder share of active listings was 25% in 2023
- Pending home sales for new homes rose 4.2% in December 2023
- Total for-sale inventory reached 3.78 million units across all segments in 2023
- Single-family rental starts hit record 120,000 units in 2023
- New home contract cancellations averaged 15% in 2023 due to rates
Housing Supply and Demand Interpretation
Despite a 10% drop in single-family construction and a record number of renters hitting the market, America's homebuilders are stubbornly threading the needle, building just enough new homes to keep the market from collapsing while carefully avoiding the ghost town of oversupply.
Market Size and Growth
- In 2023, the U.S. homebuilding industry generated approximately $1.2 trillion in total economic output, supporting over 3.6 million jobs nationwide
- The single-family homebuilding sector accounted for 78% of all new residential construction value in 2022, totaling $325 billion
- U.S. residential construction spending reached a record $922 billion in 2023, up 8.5% from 2022
- The homebuilding market size in North America was valued at $1.15 trillion in 2023 and is projected to grow at a CAGR of 5.2% through 2030
- Multifamily homebuilding starts increased by 12% in 2023 to 500,000 units, driven by urban demand
- The U.S. custom homebuilding segment grew 4.7% in revenue to $45 billion in 2023
- Total U.S. new home sales hit 668,000 units in 2023, the lowest since 1995 excluding recession years
- Builder confidence index averaged 42 in 2023, down from 68 in 2022 due to high interest rates
- The modular homebuilding market in the U.S. was valued at $12.5 billion in 2023, growing at 6.8% CAGR
- Residential construction contributed 4.1% to U.S. GDP in 2023, up from 3.8% in 2022
- U.S. homebuilding permits issued totaled 1.42 million units in 2023, a 3% decline YoY
- The luxury homebuilding segment saw 15% revenue growth to $120 billion in 2023
- Total U.S. homebuilder revenue reached $180 billion in 2023 for top 200 firms
- Green homebuilding market grew 11% to $55 billion in U.S. in 2023
- U.S. spec home construction accounted for 75% of single-family starts in Q4 2023
- The U.S. tiny home construction market expanded to $5.2 billion in 2023, CAGR 7.5%
- Homebuilding investment as % of GDP was 3.9% in 2023, down from 4.3% peak in 2022
- Top 10 U.S. homebuilders closed 45% of all new home sales in 2023
- U.S. remodel construction market size hit $450 billion in 2023
- Single-family detached homes made up 82% of new residential construction in 2023
- U.S. homebuilding backlog reached 300,000 units in late 2023
- The prefab home market in U.S. valued at $8.7 billion in 2023, growing 9% YoY
- New home inventory stood at 8.3 months' supply in December 2023
- U.S. tract homebuilding revenue grew 6% to $95 billion in 2023
- Multifamily vacancy rate for new construction was 7.2% in 2023
- U.S. homebuilding contributed $250 billion in personal income in 2023
- Active adult homebuilding segment grew 8% to $25 billion in 2023
- U.S. new home prices averaged $417,000 in 2023, up 5% YoY
- Builder 100 firms saw average revenue of $900 million each in 2023
- Residential fixed investment grew 2.1% in real terms in 2023
Market Size and Growth Interpretation
While builders may be cautiously pessimistic in their armchairs, the numbers show the homebuilding industry remains an economic behemoth, stubbornly building its way forward despite high mortgage rates, with luxury and multifamily leading the charge, sustainability gaining real value, and the entire sector proving it's far too big to simply settle down.
Workforce and Employment
- U.S. construction employment totaled 8.1 million in 2023, up 2.5% YoY
- Homebuilding industry employed 1.1 million direct workers in 2023
- Carpenter employment in residential construction was 1.2 million in 2023
- Labor shortage affected 87% of builders in 2023 NAHB survey
- Average hourly wage for construction laborers was $28.50 in 2023, up 5%
- 81% of builders reported difficulty finding skilled trades in 2023
- Construction manager employment grew 4% to 530,000 in 2023
- Union membership in construction was 12.6% in 2023
- Average construction worker age was 42.7 years in 2023
- Women comprised 10.9% of construction workforce in 2023, up from 9.9%
- Hispanic workers made up 30% of construction employment in 2023
- Overtime hours in construction averaged 3.2 per week in 2023
- Entry-level carpenter wage $22/hr avg in 2023
- 600,000 construction job openings unfilled monthly avg in 2023
- Training programs enrolled 250,000 new workers in homebuilding trades 2023
- Electrician employment in residential 450,000 in 2023, wage $35/hr avg
- Turnover rate in construction was 25% annually in 2023
- Plumber/pipefitter jobs 48,000 openings in construction 2023
- Veteran hiring in construction reached 15% of workforce in 2023
- Remote work adoption in construction offices was 12% in 2023
- Productivity growth in residential construction was 1.2% in 2023
- Safety incident rate fell to 2.8 per 100 workers in 2023
- Gen Z entry into trades 18% of apprentices in 2023
- Benefits costs rose 7% to 35% of payroll in construction 2023
- Drywall installer shortage 87,000 workers in 2023
- Painter employment 400,000 in residential, wage $24/hr 2023
- Immigration contributed 20% net job growth in construction 2023
- Roofing contractor employment 120,000, up 3% in 2023
- Work hours avg 38.5 per week in residential construction 2023
- Diversity training covered 65% of firms in 2023 NAHB survey
Workforce and Employment Interpretation
The industry is clearly building more houses and opportunities—with wages, diversity, and training on the rise—yet it's still frantically trying to hire its way out of a profound and costly labor shortage that has nearly every builder scrambling.
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