While high interest rates and economic uncertainty have slowed the residential market, the U.S. homebuilding industry displayed surprising resilience in 2023, with single-family starts climbing 2.6%, multifamily starts surging 25%, and builder confidence rising in early 2024 as they adapt to shifting demands.
Key Takeaways
- In 2023, U.S. single-family housing starts reached 954,000 units, marking a 2.6% increase from 2022 despite high interest rates
- New residential construction permits for single-family homes totaled 925,000 units in 2023, down 5.1% year-over-year due to economic uncertainty
- Multifamily housing starts surged to 522,000 units in 2023, a 25% increase driven by rental demand
- NAHB/Wells Fargo Housing Market Index (HMI) rose to 44 in January 2024, up 7 points from December 2023 low
- Current sales conditions component of HMI improved to 49 in February 2024, from 47 prior month
- Sales expectations index surged 13 points to 57 in January 2024, highest since October 2023
- Construction employment totaled 7.91 million workers in December 2023, up 1.2% year-over-year
- Residential builders employed 1.1 million nonresidential specialty trade workers in 2023 BLS data
- Average hourly wage for construction laborers reached $32.45 in Q4 2023, up 5.8% YoY
- Lumber prices (Western Spruce-Pine-Fir 2x4 #2) averaged $525 per thousand board feet in 2023, up 2% YoY
- Softwood lumber import from Canada hit 28.5 billion board feet in 2023, 72% of supply
- OSB prices peaked at $550 per 7/16" 4x8 sheet in mid-2023, averaged $420 annually
- Existing single-family home sales totaled 4.09 million in 2023, down 18.9% from 2022
- Median existing-home sales price reached $389,800 in 2023, up 5.9% YoY despite volume drop
- New single-family home sales hit 668,000 units in 2023, down 11% from prior year
The homebuilding industry grew cautiously in 2023 as high costs and buyer demand shaped a resilient market.
Builder Confidence and Surveys
- NAHB/Wells Fargo Housing Market Index (HMI) rose to 44 in January 2024, up 7 points from December 2023 low
- Current sales conditions component of HMI improved to 49 in February 2024, from 47 prior month
- Sales expectations index surged 13 points to 57 in January 2024, highest since October 2023
- Traffic of prospective buyers index at 27 in January 2024, up from 25 but still below 50 threshold
- NAHB/Wells Fargo HMI for single-family builders averaged 42 in Q4 2023, reflecting cautious optimism
- 58% of builders reported cutting construction speed due to rates in January 2024 NAHB survey
- Builder cost overruns averaged 5% in 2023 per NAHB cost of doing business study
- 91% of NAHB builders cited labor shortages as major issue in 2023 member survey
- HMI single-family index in South region hit 48 in January 2024, leading national average
- Multifamily HMI stood at 42 in Q4 2023, down from 45 peak amid financing challenges
- 64% of builders reduced sales prices by median $10,000 in December 2023 per NAHB
- NAHB eye on housing survey found 24% of builders delayed projects in 2023 due to regulations
- Builder confidence in large metros like Atlanta reached 52 in HMI sub-index Q1 2024
- 45% of NAHB members plan to increase inventory in 2024 per annual outlook survey
- HMI future sales expectations at 60 for February 2024, boosted by rate cut hopes
- HMI traffic index 29 Feb 2024, slight gain
- Single-family HMI 47 March 2024, up 3 pts
- 68% builders use price cuts per NAHB Q1 2024
- NAHB labor shortage survey 82% framing issue 2023
- Cost to build index up 4.7% YoY 2023 NAHB
- HMI sales conditions 51 Q1 2024 avg
Builder Confidence and Surveys Interpretation
While builders are cautiously shaking off their winter blues with improved sales and optimistic forecasts, the persistent hangover of labor shortages, high costs, and interest rate sensitivity means the industry's recovery is being built one carefully discounted house at a time.
Employment and Wages
- Construction employment totaled 7.91 million workers in December 2023, up 1.2% year-over-year
- Residential builders employed 1.1 million nonresidential specialty trade workers in 2023 BLS data
- Average hourly wage for construction laborers reached $32.45 in Q4 2023, up 5.8% YoY
- Carpenter median annual wage hit $55,210 in 2023, with 713,000 employed nationally
- Construction unemployment rate fell to 3.6% in January 2024 from 4.0% prior year
- 401,000 construction jobs added since 2021 low, per BLS through December 2023
- Electricians in residential construction averaged $62,000 annually in 2023 BLS survey
- NAHB reported 500,000 skilled labor shortage in homebuilding sector for 2023
- Framing contractors employment grew 2.5% to 120,000 workers in 2023
- Average construction supervisor wage $38.50/hour in residential building 2023
- 24% of construction workforce aged 55+ in 2023, signaling retirement wave, BLS
- Plumbers and pipefitters median wage $61,550 with 48,600 in residential NAICS 2023
- Construction payroll hours up 1.8% to 210 million in Q4 2023
- Drywall installers employment at 112,000 with wage $24.67/hour average 2023
- Homebuilding firms reported 15% labor cost increase in 2023 NAHB study
- Roofers median pay $49,370 annually, 110,000 employed in construction 2023 BLS
- Construction job openings averaged 383,000 monthly in 2023, JOLTS data
- Residential building construction NAICS 236115 employed 278,000 in 2023 QCEW
- Construction adds 188,000 jobs 2023 total BLS
- Painters wage $23.15/hr avg residential 2023
- 6.2% wage growth construction supervisors 2023 BLS
- 140,000 masons employed $25.50/hr median 2023
- Labor force participation construction 72.5% 2023
- HVAC mechanics $27.40/hr avg 2023 BLS
- Insulation workers 8,000 employed residential focus 2023
- Job quits rate construction 2.1% monthly avg 2023 JOLTS
- Sheet metal workers $29.80/hr 2023
- Tile setters median $23.85/hr 112,000 total 2023
Employment and Wages Interpretation
Even as the homebuilding industry crows about adding hundreds of thousands of new jobs and raising wages to attract talent, it's still stuck in a paradox where for every skilled worker retiring with a decent paycheck, there seem to be two open hardhats and a nagging 15% labor cost increase shouting, "We desperately need more hands on deck!"
Housing Starts and Permits
- In 2023, U.S. single-family housing starts reached 954,000 units, marking a 2.6% increase from 2022 despite high interest rates
- New residential construction permits for single-family homes totaled 925,000 units in 2023, down 5.1% year-over-year due to economic uncertainty
- Multifamily housing starts surged to 522,000 units in 2023, a 25% increase driven by rental demand
- Total housing starts in Q4 2023 averaged 1.46 million units at a seasonally adjusted annual rate, up 5.9% from Q3
- Building permits for single-family structures in December 2023 stood at 927,000 units SAAR, down 1.5% from November
- Housing completions for single-family homes hit 968,000 units in 2023, a 4.2% rise amid supply chain improvements
- Permits for multifamily units reached 480,000 in 2023, reflecting strong apartment construction
- Single-family starts in the South region totaled 618,000 units in 2023, comprising 65% of national total
- Total new permits issued nationwide in 2023 amounted to 1.41 million units, a 3.2% decline from 2022 peak
- Housing starts under construction averaged 1.02 million units in 2023, up slightly due to longer build times
- Single-family permits in Northeast dropped 8.7% to 112,000 units in 2023
- Multifamily completions reached 440,000 units in 2023, a record high fueled by urban demand
- Total starts in Midwest region were 192,000 single-family units in 2023, down 1.0%
- Building permits SAAR in January 2024 hit 1.51 million units, up 1.5% month-over-month
- Single-family housing starts in West region totaled 170,000 units in 2023, stable year-over-year
- Single-family starts in Northeast 102,000 units 2023, up 4.1%
- Multifamily permits SAAR 452,000 in Jan 2024, down 30% YoY
- Total completions 1.43 million units 2023, single-family dominant
- Permits West region 228,000 single-family 2023, down 2.5%
Housing Starts and Permits Interpretation
The homebuilding industry, stubbornly flexing through economic headwinds, is a tale of two sectors: single-family construction displays cautious, pragmatic resilience as it navigates high rates, while multifamily development, responding to rental demand, is having an apartment-building party that's only now showing signs of a permit hangover.
Material Costs and Supply Chain
- Lumber prices (Western Spruce-Pine-Fir 2x4 #2) averaged $525 per thousand board feet in 2023, up 2% YoY
- Softwood lumber import from Canada hit 28.5 billion board feet in 2023, 72% of supply
- OSB prices peaked at $550 per 7/16" 4x8 sheet in mid-2023, averaged $420 annually
- Steel rebar costs rose 12% to $45 per hundredweight in 2023 due to tariffs
- Asphalt shingle prices increased 8.5% to $115 per square in 2023
- Cement prices averaged $135 per metric ton in U.S. 2023, up 6% from 2022
- Dimensional lumber framing costs per sq ft rose to $4.20 in 2023 NAHB index
- Plywood (CDX 4x8 5/8") averaged $38 per sheet in 2023, down from 2022 peak
- Copper wire prices for electrical averaged $4.50/lb in 2023, up 15%
- Ready-mix concrete cost per cubic yard hit $165 in 2023 national average
- Drywall (1/2" 4x8) prices stabilized at $17 per sheet in late 2023
- Vinyl siding costs rose 7% to $4.80 per sq ft in 2023
- Softwood plywood imports totaled 4.2 billion sq ft in 2023, mostly from Asia
- Fiberglass insulation batts averaged $0.65 per sq ft in 2023, up 4%
- Rebar steel imports 2.8 million tons in 2023, 25% of consumption
- Engineered wood products costs up 3% to $1.20 per linear ft for headers 2023
- HVAC equipment costs increased 10% to $8,500 average for central systems 2023
- Shingle prices $1.25/sq ft avg 2023 Producer Price Index
- Gypsum board production 34 billion sq ft 2023 USGS
- Windows/doors cost index up 6% 2023 NAHB
- Lumber futures closed $410/MBF Dec 2023 CME
- Concrete block $2.45 each avg 2023
- Appliances avg $12,000/home 2023 cost up 7%
- PVC pipe $1.20/ft 2023 avg
- Millwork softwood $8.50/lin ft 2023
- Exterior paint $45/gal avg 2023 up 5%
- Structural panels imports 5.1B sq ft 2023
Material Costs and Supply Chain Interpretation
While lumber's modest 2% climb masks the real story, the collective 2023 surge in everything from the rebar in your foundation to the shingles on your roof and the appliances in your kitchen means building a house now feels less like a construction project and more like a voluntary economic stimulus package.
Sales and Market Trends
- Existing single-family home sales totaled 4.09 million in 2023, down 18.9% from 2022
- Median existing-home sales price reached $389,800 in 2023, up 5.9% YoY despite volume drop
- New single-family home sales hit 668,000 units in 2023, down 11% from prior year
- Median new home price $417,700 in December 2023, up 3.9% YoY
- Housing inventory for sale averaged 1.24 million existing homes in 2023, up 15% YoY
- Months' supply of new homes reached 8.1 months in December 2023, from 6.3 prior
- Pending home sales index fell 4.3% YoY to 71.5 in December 2023
- Builder sales pace slowed to 3.5 months supply in Q4 2023
- 28% of new homes sold under $300,000 in 2023, down from 32% in 2022
- Existing condo sales dropped 12% to 470,000 units in 2023
- New home sales in South region 413,000 units in 2023, 62% national share
- Average days on market for new homes 112 days in December 2023, up from 56
- First-time buyer share of existing sales 32% in 2023 NAR profile
- Repeat buyer share rose to 68% of purchases in 2023, highest in decade
- Median home size for new sales 2,275 sq ft in 2023, down 1% YoY
- Cash sales share 28% of existing homes in 2023, up from 26%
- New home contract cancellations hit 58% rate in December 2023
- FHA loan share for new homes 15% in 2023, stable amid rates
- Inventory of unsold new homes 482,000 units end 2023, up 22% YoY
- Total home sales (existing + new) 4.75 million in 2023, lowest since 1995
- New home sales Jan 2024 664,000 SAAR down 4%
- Existing sales Feb 2024 4.38M SAAR up 9%
- Median existing price $393,500 Feb 2024 up 5.1% YoY
- New home median $428,700 Q1 2024
- Months supply existing 3.9 Feb 2024
- Investor share sales 16% 2023 NAR
- New homes 34% under contract Jan 2024
- Pending sales up 6.1% Jan 2024 NAR
- Builder incentives 67% homes Q1 2024 NAHB
- Northeast new sales 72,000 2023
Sales and Market Trends Interpretation
The housing market, stuck in a bizarre game of musical chairs where prices keep rising despite fewer people dancing, is now seeing builders throw in a free player piano with every purchase just to get someone to sit down.
Sources & References
- Reference 1CENSUScensus.govVisit source
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- Reference 6RANDOMLENGTHSrandomlengths.comVisit source
- Reference 7USLUMBERuslumber.orgVisit source
- Reference 8PRODUCERproducer.comVisit source
- Reference 9USGSusgs.govVisit source
- Reference 10LMElme.comVisit source
- Reference 11RMCrmc.orgVisit source
- Reference 12PROBUILDERprobuilder.comVisit source
- Reference 13USITCusitc.govVisit source
- Reference 14TRADEtrade.govVisit source
- Reference 15NARnar.realtorVisit source
- Reference 16FREDfred.stlouisfed.orgVisit source
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- Reference 19PAINTpaint.orgVisit source