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US Residential Construction Market Size 2025-2029

The residential construction market size in the US is forecast to increase by USD 242.9 million at a CAGR of 4.5% between 2024 and 2029.

The residential construction market is experiencing significant growth, driven by several key factors. Firstly, the increasing household formation rates in the US continue to fuel demand for new housing units. Secondly, there is a rising focus on sustainability in residential construction projects, with homebuilders increasingly adopting energy-efficient and eco-friendly building materials and practices.
However, the market also faces challenges, including a shortage of skilled labor for large-scale residential real estate projects, which can impact project timelines and budgets. These trends and challenges are shaping the future of the residential construction industry in the US.

What will be the US Residential Construction Market Size During the Forecast Period?

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The residential construction market is experiencing a significant shift as the affordable housing trend gains momentum. The Federal Reserve's decision to keep the federal funds rate low has contributed to a decrease in mortgage rates, making it an opportune time for home buyers to enter the market. However, the housing supply remains a concern, with construction spending in the residential investment sector showing only modest growth. The labor market's current state is another factor influencing the residential construction industry. With a low unemployment rate, there is a high demand for labor, leading to increased wages and, in turn, higher construction costs.
Inflation also poses a challenge, as it erodes the purchasing power of home buyers and builders alike. The economy's overall health plays a crucial role in the residential construction market's dynamics. A strong economy typically leads to increased demand for new homes, as evidenced by the double-digit growth in housing starts and building permits for single-family homes. However, a recession can lead to a significant decrease in construction activity, as seen in the cancellation rate of housing projects. The Federal Reserve's interest rate decisions, inflation, and the economy's health all impact the residential construction market. Affordable housing programs, such as housing choice vouchers and fair housing programs, play a vital role in ensuring access to housing for a broader population. The construction sectors must navigate these market dynamics to remain competitive and meet the demand for new homes.
The US residential construction market is seeing significant shifts, driven by various housing market trends. Sustainable homebuilding practices are gaining momentum, with a focus on energy-efficient homes and green building materials. Modular construction and prefab housing are becoming increasingly popular for their cost-effective and timely solutions. Urban redevelopment projects are revitalizing city areas, while suburban expansion is fueling demand for new homes. Affordable housing projects are crucial in addressing housing shortages, and real estate investment continues to thrive in these sectors. Smart home integration is also on the rise, with luxury home construction embracing high-tech features. The impact of mortgage rates, coupled with multifamily housing growth and home renovation demand, adds complexity to the market's dynamics.

How is this market segmented and which is the largest segment?

The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD million' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

Product

  Apartments and condominiums
  Villas
  Other types


Type

  New construction
  Renovation


Application

  Single family
  Multi-family


Geography

  US

By Product Insights

The apartments and condominiums segment is estimated to witness significant growth during the forecast period.

The residential construction market in the US is experiencing growth in the apartment and condominium sectors, driven by shifting preferences and lifestyle choices. Urbanization is a significant factor fueling this trend, as more individuals opt for the conveniences and amenities offered in urban areas. As a result, developers are constructing modern, sustainable, and community-focused living spaces in the form of high-rise apartment buildings and condominium complexes. These structures cater to various demographics, including intergenerational groups and younger generations, reflecting diverse living circumstances. The labor economy and vaccination rates have also contributed to the continued activity in the residential sector, allowing for steady progress in construction projects. While the non-residential sector has faced challenges, the residential sector remains a vi

In June 2024, there were less building permits for new residential construction in the United States a year earlier. In late 2022 and early 2023, there was the lowest number of building permits issued since the first half of 2020. The number of U.S. new home construction starts has also been lower than in previous years.

The North American residential construction market is segmented by property type (single family and multi-family), construction type (new construction and renovation), and region (United States, Canada, and Mexico). The report offers size and forecasts for the North American residential construction market in terms of value (USD billion) for all the above segments. The impact of the COVID-19 pandemic is also covered in the report.

Explore the Residential Building Construction Market trends! Covers key players, growth rate 6.6% CAGR, market size $6023.61 Billion, and forecasts to 2034. Get insights now!

The Residential Construction Market Report is Segmented by Type (Villas and Landed Houses and Condominiums and Apartments) and Key Cities (London, Birmingham, Glasgow, Liverpool, and the Rest of the UK). The Report Offers Market Size and Forecasts for UK Residential Construction Market in Value (USD) for all the Above Segments.

Explore the Single-Family Housing Construction (Individual Houses) Global Market Report 2025 Market trends! Covers key players, growth rate 6.5% CAGR, market size $1079.66 Billion, and forecasts to 2033. Get insights now!

The consumer price of housing in urban areas of the United States increased by over six percent in 2023. That was the second-largest increase on a year-over-year basis since 2000. Meanwhile, 2009 was the only year in which housing prices decreased. One of the main reasons for that may have been the subprime mortgage crisis of 2007. During that period, the value of new residential construction put in place in the U.S. stagnated.

In 2023, there were more new housing starts in the South of the United States than in every other region of the country combined. The West was the second region with the highest number of housing starts, which amounted to roughly 400,800 units in 2021. Northeast was the only region in the U.S. that experienced an increase in the number of housing starts in 2022.

The Germany Residential Construction Market is Segmented by Type (Apartments & Condominiums, And Landed Houses & Villas), By Construction Type (New Construction, And Renovation). The Report Offers Market Size and Forecast Values (USD) for all the Above Segments.

Explore the Nonresidential Building Construction Market trends! Covers key players, growth rate 3.9% CAGR, market size $3726.66 Billion, and forecasts to 2034. Get insights now!

India's residential construction market report is segmented by type (apartments and condominiums, villas, and other types) and by construction type (new construction and renovation). The report offers the market sizes and forecasts for the Indian residential construction market in value (USD) for all the above segments and the impact of COVID-19 on the market.

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US Commercial Construction Market Size 2025-2029

The us commercial construction market size is forecast to increase by USD 191 billion billion at a CAGR of 2.7% between 2024 and 2029.

The Commercial Construction Market in the US is experiencing significant growth driven by the increasing trend towards sustainable building practices and the emergence of smart cities. Green buildings, which incorporate energy-efficient designs and renewable energy sources, are gaining popularity due to their environmental benefits and cost savings over the long term. This trend is expected to continue as more businesses prioritize sustainability and energy efficiency in their operations. However, the market also faces challenges, most notably the lack of skilled labor in the construction industry. The industry's aging workforce and a decline in new entrants have created a labor shortage, leading to delays and increased costs for construction projects. To mitigate this challenge, companies are exploring innovative solutions such as modular construction and automation technologies to streamline processes and reduce reliance on manual labor. In , the US Commercial Construction Market presents significant opportunities for growth, particularly in the area of sustainable building practices and smart city development. However, companies must also address the challenge of the labor shortage by adopting new technologies and innovative construction methods to remain competitive and deliver projects on time and on budget. By staying informed of these trends and challenges, businesses can effectively capitalize on market opportunities and navigate challenges in the ever-evolving construction landscape.

What will be the size of the US Commercial Construction Market during the forecast period?

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The commercial construction market in the US continues to exhibit activity, driven by the demand for new office buildings, retail spaces, outdoor leisure facilities, and mixed-use developments. Urbanization and infrastructure development programs are significant growth areas, fueling the need for renovation and retrofitting of existing structures, as well as urban regeneration projects. Energy-saving designs and water infrastructure are key trends, with a focus on reducing costs through efficient building materials and product lead times. The non-residential building market is experiencing cost escalation due to fluctuating material prices, particularly for building materials like lumber, and labor shortages, exacerbated by a shrinking labor force. Despite these challenges, investments in commercial construction remain strong, reflecting the market's ongoing importance to the US economy.

How is this market segmented?

The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in 'USD billion' for the period 2025-2029, as well as historical data from 2019-2023 for the following segments. SectorPrivate constructionPublic constructionTypeBuildingOthersEnd-userOffice buildingsRetail spacesHotels and hospitalityHealthcare facilitiesOthersGeographyUS

By Sector Insights

The private construction segment is estimated to witness significant growth during the forecast period.

The US commercial construction market encompasses the development of various structures, including office buildings, retail establishments, outdoor leisure facilities, and urban infrastructure projects. Notable initiatives in this sector include the construction of the El Paso VA Health Care Center in Fort Bliss, celebrated in August 2024, and the Skymark Reston Town Center, the tallest residential tower in the Capital Region, topped out in October 2023. These projects contribute to the expansion of the market, with a focus on mixed-use developments, infrastructure building, and energy-saving designs. However, challenges such as cost escalation due to fluctuating material prices, labor shortages, and infrastructure development programs require careful planning and management. Key areas of investment include public transportation, broadband internet, electric grid reconstruction, water infrastructure, and multifamily housing. Operational efficiency, service delivery, and safety are essential functional areas in the non-residential building market. Technological advancements in communication linkages, data and communication, and EV units are transforming the industry.

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The Private construction segment was valued at USD 1313.50 billion in 2019 and showed a gradual increase during the forecast period.

Market Dynamics

Our researchers analyzed the data with 2024 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advant

The Saudi Arabia Residential Construction Market is Segmented By Type (Apartments & Condominiums, Landed Houses & Villas, and Other Types), By Construction Type (New Construction, and Renovation), and By Key Cities (Riyadh, Jeddah, Dammam, and the Rest of Saudi Arabia). The report offers market size and forecast values (USD billion) for all the above segments.

KB Home's total revenue has increased significantly between 2011 and 2023, although with some fluctuations. The U.S. home-building company generated over 6.4 billion U.S. dollars in revenue, while those figures amounted to 1.3 billion U.S. dollars in 2011. KB Home is headquartered in Los Angeles and primarily builds homes for first-time home buyers. KB Home is one of the leading home builders based on closings.

In February 2025, approximately 111,100 home construction projects started in the United States. The lowest point for housing starts over the past decade was in 2009, just after the 2007-2008 global financial crisis. Since 2010, the number of housing units started has been mostly increasing despite seasonal fluctuations. Statista also has a dedicated topic page on the U.S. housing market as a starting point for additional investigation on this topic. The impact of the global recession The same trend can be seen in home sales over the past two decades. The volume of U.S. home sales began to drop in 2005 and continued until 2010, after which home sales began to increase again. This dip in sales between 2005 and 2010 suggests that supply was outstripping demand, which led to decreased activity in the residential construction sector. Impact of recession on home buyers The financial crisis led to increased unemployment and pay cuts in most sectors, which meant that potential home buyers had less money to spend. The median income of home buyers in the U.S. fluctuated alongside the home sales and starts over the past decade.

Global Buildings Construction Market to hit USD 9750.27B by 2029 growing at 5.5% CAGR. Explore trends, drivers, and competition for strategic insights with The Business Research Company.

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Europe Residential Construction Market size was valued at USD 1.08 Trillion in 2024 and is projected to reach USD 1.64 Trillion by 2032, growing at a CAGR of 5.4% from 2026 to 2032.

Europe Residential Construction Market Drivers

Rising Demographic Shifts and Urbanization Trends: The continuous migration to urban centers across Europe is increasing the housing demands, particularly in major metropolitan areas. According to Eurostat’s 2023 data, 75% of the EU population now resides in urban areas, marking a 2.3% increase from the previous year. This urbanization trend has created substantial pressure on residential construction, especially in cities like Berlin, Paris, and Amsterdam, where housing shortages have become increasingly acute.

Growing Sustainable Building Requirements: European nations are witnessing a fundamental shift toward sustainable and energy-efficient housing construction. The European Commission reported in November 2023 that 42% of new residential building permits across the EU now incorporate renewable energy systems. This transformation is driven by stringent environmental regulations, including the EU’s Energy Performance of Buildings Directive, which mandates nearly zero-energy buildings for all new construction.

Escalating Government Housing Initiatives: The European government has intensified its commitment to addressing housing shortages through various support programs and incentives. The German Federal Statistical Office revealed in January 2024 that government spending on residential construction subsidies reached €18.2 billion, representing a 15% increase year-over-year. These initiatives have particularly focused on affordable housing development and first-time homebuyer assistance programs.

The US residential construction market, valued at $986.67 million in 2025, is projected to experience steady growth, driven by several key factors. A rising population, particularly among millennials and Gen Z entering their prime home-buying years, fuels consistent demand for new housing. Furthermore, low mortgage interest rates (though subject to fluctuation) and government initiatives aimed at stimulating affordable housing contribute to market expansion. The market is segmented by product type (apartments & condominiums, villas, other), construction type (new construction, renovation), and application (single-family, multi-family). While the market benefits from these positive drivers, it also faces challenges. Increased material costs, labor shortages, and supply chain disruptions create headwinds that impact project timelines and profitability. Competition among construction companies is fierce, with established players vying for market share alongside emerging firms. Successfully navigating these challenges requires strategic planning, efficient resource management, and adaptability to evolving market dynamics. Over the forecast period (2025-2033), a compound annual growth rate (CAGR) of 4.5% is anticipated, indicating a significant expansion of the market despite these complexities. The consistent demand, coupled with strategic investments in infrastructure and innovative construction technologies, is expected to maintain this steady growth trajectory. Regional variations within the US are expected, with higher growth potentially seen in areas experiencing population booms or significant economic development. The segmentation of the US residential construction market provides opportunities for specialized firms. Builders focusing on sustainable and energy-efficient housing are gaining traction as environmental concerns grow. Similarly, companies offering renovation services are likely to see strong demand as existing homeowners invest in upgrades and improvements. The competitive landscape necessitates a focus on innovation, customer relationship management, and a commitment to delivering high-quality projects on time and within budget. The industry must also adapt to the growing interest in smart home technologies and other advancements to remain competitive and appeal to the evolving demands of modern homeowners. Long-term success will depend on the ability of companies to manage risk, forecast market trends accurately, and develop sustainable business models that address both the growth potential and the inherent challenges of the sector.

In the last quarter of 2024, San Francisco, New York, and Honolulu were some of the U.S. cities with the highest housing construction costs. Meanwhile, Phoenix had one of the lowest construction costs for high-end multifamily homes at 280 U.S. dollars per square foot and Las Vegas for single-family homes between 235 and 470 U.S. dollars per square foot. Construction cost disparities As seen here, the construction cost for a high-end multi-family home in San Francisco in the first quarter of 2024 was over twice more expensive than in Phoenix. Meanwhile, there were also great differences in the cost of building a single-family house in New York and in Portland or Seattle. Some factors that may cause these disparities are the construction materials, installation, and composite costs, differing land values, wages, etc. For example, although the price of construction materials in the U.S. was rising at a slower level than in 2022 and 2023, several materials that are essential in most construction projects had growth rates of over five percent in 2024. Growing industry revenue Despite the economic uncertainty and other challenges, the size of the private construction market in the U.S. rose during the past years. It is important to consider that supply and demand for housing influences the revenue of this segment of the construction market. On the supply side, single-family home construction fell in 2023, but it is expected to rise in 2024 and 2025. On the demand side, some of the U.S. metropolitan areas with the highest sale prices of single-family homes were located in California, with San Jose-Sunnyvale-Santa Clara at the top of the ranking.