Imagine a single industry so colossal that its $907 billion annual output not only builds our homes but also powers 3.8% of the entire US economy and supports over a million jobs.
Key Takeaways
- In 2023, the US residential construction market size was valued at $907 billion, representing 3.8% of GDP
- Residential building construction spending in the US reached $899.1 billion in 2023, up 7.2% from 2022
- The residential construction sector contributed $2.1 trillion to the US economy in 2022 through direct, indirect, and induced effects
- US housing starts totaled 1.41 million units in 2023, a 5.4% increase from 2022
- Single-family housing starts reached 1.00 million units in 2023, up 9.4% year-over-year
- Multifamily starts were 414,000 units in 2023, down 6.8% from 2022 peak
- Employment in US residential building construction was 691,000 in 2023 average
- Construction laborers in residential sector numbered 378,000 in 2023
- Carpenters employed in residential construction totaled 212,000 in 2023
- Average new single-family home price was $509,300 in 2023
- Material costs for residential construction rose 5.1% in 2023
- Lumber prices averaged $486 per thousand board feet in 2023, down from 2022 peak
- 67% of builders reported using modular construction techniques in 2023
- Energy-efficient homes demand grew 15% in 2023 per consumer surveys
- Smart home tech integration in 45% of new residential builds in 2023
The residential construction industry contributes trillions to the economy while facing persistent labor shortages.
Costs, Materials, and Pricing
- Average new single-family home price was $509,300 in 2023
- Material costs for residential construction rose 5.1% in 2023
- Lumber prices averaged $486 per thousand board feet in 2023, down from 2022 peak
- Lot costs represented 23.8% of total single-family home sales price in 2023
- Labor costs accounted for 27.1% of construction cost in Q4 2023 NAHB survey
- Finished lot price averaged $85,139 for single-family homes in 2023
- Builder financing costs rose to 16.5% of sales price in 2023
- Soft costs like permits and fees were 7.8% of total home price in 2023
- Average resale home price increased 5.2% to $389,800 in 2023
- Construction cost per square foot for single-family homes was $158 in 2023
- Gypsum products prices up 8.4% YoY in residential builds 2023
- Ready-mix concrete costs rose 4.7% in 2023 for residential use
- Insulation material costs increased 6.2% in 2023
- Plumbing fixtures prices up 3.9% YoY in 2023 residential market
- Electrical wiring costs averaged $12.50 per foot in 2023 installs
- Roofing materials cost per square was $450 average in 2023
- HVAC systems for new homes averaged $12,000 installation cost 2023
- Window and door costs represented 4.2% of build cost in 2023
Costs, Materials, and Pricing Interpretation
The dream of owning a new $500,000 home is being meticulously assembled, board by expensive board, by a frustratingly resilient alliance of lumber yards, electricians, and a plot of land that costs more than your parents' first house.
Employment and Workforce
- Employment in US residential building construction was 691,000 in 2023 average
- Construction laborers in residential sector numbered 378,000 in 2023
- Carpenters employed in residential construction totaled 212,000 in 2023
- Average hourly wage for residential construction managers was $52.14 in 2023
- 4.2% unemployment rate in construction industry including residential in 2023
- Residential builders reported 85% difficulty finding skilled labor in 2023 NAHB survey
- 250,000 worker shortage projected for residential construction by 2025
- Women represented 10.9% of residential construction workforce in 2023
- Hispanic or Latino workers made up 34.1% of construction laborers in residential in 2023
- Job openings in construction averaged 383,000 monthly in 2023
- Quit rate in construction was 2.8% monthly average 2023
- Average residential construction worker tenure was 3.8 years in 2023
- Training programs enrolled 45,000 new entrants into residential trades in 2023
- Median age of residential construction workers was 42.5 years in 2023
- Overtime hours averaged 3.2 per week for residential laborers in 2023
- Total residential construction payroll was $45.2 billion in Q4 2023
- Drywall installers in residential earned $27.45 median hourly in 2023
- Electricians in residential construction averaged $31.22 hourly wage 2023
Employment and Workforce Interpretation
While residential construction may be booming with billions in payroll and high wages, it's precariously propped up by a graying, overstretched workforce desperately searching for a quarter-million new recruits to literally build the future.
Housing Starts and Permits
- US housing starts totaled 1.41 million units in 2023, a 5.4% increase from 2022
- Single-family housing starts reached 1.00 million units in 2023, up 9.4% year-over-year
- Multifamily starts were 414,000 units in 2023, down 6.8% from 2022 peak
- Building permits issued for new residential construction totaled 1.46 million units in 2023
- Single-family permits averaged 978,000 units annually in 2023
- Housing completions reached 1.43 million units in 2023
- In the South region, housing starts were 620,000 units in 2023, 44% of national total
- Northeast single-family starts totaled 84,000 units in 2023
- Midwest multifamily permits were 92,000 units in 2023
- West region saw 1.02 million total residential permits in 2023
- Housing starts under construction averaged 971,000 units in 2023
- February 2024 single-family starts were 1.03 million SAAR, up 11.5% from January
- Permits for single-family homes in March 2024 were 949,000 SAAR
- Total starts in Q1 2024 averaged 1.41 million SAAR
- 2024 forecast predicts 1.43 million total housing starts in US
- Single-family starts projected at 1.01 million for 2024
Housing Starts and Permits Interpretation
While American builders are cautiously adding single-family homes to feed a hungry market, they’re pulling back on apartment projects, signaling a shift toward homeowners but leaving renters out in the cold.
Industry Size and Economic Impact
- In 2023, the US residential construction market size was valued at $907 billion, representing 3.8% of GDP
- Residential building construction spending in the US reached $899.1 billion in 2023, up 7.2% from 2022
- The residential construction sector contributed $2.1 trillion to the US economy in 2022 through direct, indirect, and induced effects
- In 2023, new residential construction accounted for 1.2 million jobs directly in the US
- Global residential construction market was projected to grow from $4.2 trillion in 2023 to $5.8 trillion by 2030 at a CAGR of 4.6%
- US single-family homebuilding market share was 75% of total residential starts in 2023
- Multifamily residential construction spending hit $117 billion in Q4 2023
- Residential construction added $1.4 trillion in value-added output to the US economy in 2023
- The sector's total economic impact multiplier was 2.3 for every $1 spent on residential construction in 2022
- In 2023, residential construction represented 4.1% of US private fixed investment
Industry Size and Economic Impact Interpretation
The U.S. residential construction industry, a nearly trillion-dollar economic engine, masterfully demonstrates that building a single-family home not only puts a roof over someone's head but, with a powerful 2.3x economic multiplier, essentially builds two and a half rooms of the entire economy along with it.
Trends, Forecasts, and Consumer Preferences
- 67% of builders reported using modular construction techniques in 2023
- Energy-efficient homes demand grew 15% in 2023 per consumer surveys
- Smart home tech integration in 45% of new residential builds in 2023
- Aging-in-place features requested by 82% of buyers aged 55+ in 2023
- Open floor plans preferred by 84% of new home buyers in 2023 survey
- Home office space desired in 91% of new single-family homes 2023
- NAHB/Wells Fargo HMI index averaged 42 in 2023, indicating cautious outlook
- 2024 single-family sales forecast at 4.5 million units
- Sustainability features like solar panels in 28% of new homes 2023
- Tiny homes market grew 12% in 2023 to $5.2 billion
- Prefabricated homes sales up 20% YoY in 2023 US market
- 3D-printed homes completed 15 projects in US by end 2023
- Builder confidence for current sales conditions at 47 in Dec 2023 HMI
- Traffic of prospective buyers index averaged 32 in 2023
- 76% of millennials prefer urban/suburban mixed-use developments 2023
- Accessory dwelling units (ADUs) permitted increased 25% in 2023
- Net-zero energy homes certifications up 18% to 1,200 in 2023
- Virtual reality tours used by 62% of builders for marketing in 2023
- Biophilic design elements in 55% of luxury new homes 2023
Trends, Forecasts, and Consumer Preferences Interpretation
While builders cautiously navigate a lukewarm market, they are pragmatically piecing together the future home: a prefabricated, energy-efficient sanctuary where grandparents age in place, millennials work remotely in open spaces, and everyone is just one smart device away from forgetting where they left their keys.
Sources & References
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