Despite the pandemic's broader economic disruptions, low interest rates in 2020 initially fueled a housing market boom driven by work-from-home orders and a shift toward residential construction. This surge was a lifeline for builders amid economic turbulence. However, the tide turned in 2022 and 2023 as the Federal Reserve's interest rate hikes curbed housing investments, dampening consumer enthusiasm and slowing residential construction activity. Low housing stock and rate cuts late in 2024 led to growth in single-family housing starts, boosting revenue. Single-family home development climbed in more affordable and less densely populated areas in 2024, but new multifamily developments have plummeted. Industry revenue has been climbing at a CAGR of 0.8% over the past five years to total an estimated $233.5 billion in 2025, including an estimated increase of 0.2% in 2025 alone. The initial boom in 2020 and 2021 led to one of the most significant expansions in home-building in recent memory, yet interest rate hikes soon tempered this growth. As smaller-scale developers struggled with escalating construction costs and regulatory hurdles, larger, financially robust companies like DR Horton, Lennar and PulteGroup managed to thrive and expand their operations. These larger companies maximized their market share, leveraging their resources to navigate the challenging economic climate and maintain momentum despite the pressures of rising material costs and labor shortages. These rising material costs and labor shortages have driven up purchase and wage costs, contributing to profit declines over the past five years. Expected interest rate cuts will boost housing developers. Developers will benefit from these favorable conditions, especially those who strategically invest in less densely populated areas to meet the growing appetite for affordable housing. Rate cuts will also provide relief to smaller housing developers more sensitive to interest rate fluctuations. Sustainability also looms on the horizon, with tax incentives and energy-efficient building standards encouraging developers to explore eco-friendly construction. Still, rising material costs and labor shortages will continue to stifle profit growth and increase housing prices. Larger companies will continue to gain market share, strategically developing homes near areas with strong job growth near new large manufacturing facilities. Industry revenue is forecast to expand at a CAGR of 1.4% to total an estimated $250.6 billion through the end of 2030.

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US Residential Construction Market Size 2025-2029

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

Major Market Trends & Insights

By Product - Apartments and condominiums segment was valued at USD 509.50 million in 2022
By Type - New construction segment accounted for the largest market revenue share in 2022

Market Size & Forecast

Market Opportunities: USD 39.65 million
Market Future Opportunities: USD 242.90 million 
CAGR : 4.5%

Market Summary

The residential construction market in the US is experiencing a significant shift towards sustainability, with indexed adoption rates of green building practices increasing by approximately 15% over the past decade. This trend is driven by both environmental concerns and consumer demand for energy-efficient homes. However, the market faces challenges, including a persistent skilled labor shortage, which has led to a 6% increase in construction costs for large-scale residential projects. Despite these hurdles, the sector continues to evolve, with technological advancements streamlining processes and enhancing efficiency.
For instance, the use of modular and prefabricated housing solutions has gained traction, reducing on-site construction time by up to 50%. These trends and challenges underscore the dynamic nature of the residential construction market in the US.

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

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The residential construction market in the US remains a significant economic sector, with current activity demonstrating a steady expansion of 3.5%. This growth is expected to persist, as future expectations indicate a continuous increase of 2.8%. A noteworthy comparison reveals that the residential sector accounts for approximately 25% of the total construction output, surpassing the commercial sector's 20% share. This data underscores the market's ongoing importance and its substantial contribution to the US economy.

How is this US Residential Construction Market segmented?

The residential construction in US industry 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
  Luxury Homes
  Other types


Type

  New construction
  Renovation


Application

  Single family
  Multi-family


Construction Material

  Wood-framed
  Concrete
  Steel
  Modular/Prefabricated


Geography

  North America

    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 witnessing significant growth and transformation, driven by various trends and innovations. Approximately 40% of new single-family homes in the US are now being built with energy-efficient designs, incorporating smart home technology, and adopting high-performance building practices. Net-zero energy buildings, a key component of sustainable building, have seen a 25% increase in adoption, with IoT in construction enabling real-time monitoring and automation. Quality control procedures, risk management software, and automation in construction have become essential for managing complex projects and ensuring timely completion. Sustainable building practices, including the use of geotechnical engineering, sustainable building materials, and passive fire protection, have gained significant traction, accounting for 30% of total residential construction projects.

MEP engineering software, project scheduling software, and construction management software are vital tools for optimizing design and construction processes. The market for prefabricated components, such as modular construction and prefabricated housing, has experienced a 20% growth in recent years, offering cost savings, reduced construction time, and improved sustainability. LEED certification and water management systems are increasingly being adopted to ensure energy efficiency and environmental sustainability. Building automation systems, including seismic design, supply chain management, and waste management, are also becoming standard features in modern residential construction projects. Future industry growth is expected to be robust, with an estimated 35% of new residential construction projects adopting passive house design and 45% utilizing cost estimation software.

Robotics in construction, wastewater treatment, and 3D-printed structures are emerging trends that are poised to disrupt the market. Overall, the residential construction market in the US continues to evolve, offering numerous opportunities for inno

Graph and download economic data for Housing Inventory Estimate: Total Housing Units in the United States (ETOTALUSQ176N) from Q2 2000 to Q2 2025 about inventories, housing, and USA.

In recent years, glass and glazing contractors have experienced a series of ebbs and flows, largely influenced by fluctuating interest rates and shifting market dynamics. While markets like apartment construction maintained momentum when home buying became pricier in the wake of rising rates, multifamily housing starts hit lows in 2024 but have begun to recover in 2025. New single-family construction has been similarly volatile. The institutional market, buoyed by increased public spending on schools and healthcare facilities, has provided some reprieve. Yet, contractors still face the challenge of maintaining profit amid rising material and labor costs. Tariffs will likely continue to push up material costs. Stiff competition among contractors made it difficult to pass higher costs onto customers, leading to profit declines. Overall, industry revenue has been increasing at a CAGR of 2.0% over the past five years to total an estimated $24.0 billion in 2025, including an estimated 1.2% increase in 2025. Elevated interest rates hampered new residential construction, slowing single-family housing starts until eventual rate cuts rejuvenated the market. Still, tariff uncertainty keeping interest rates high has slowed single-family housing starts in 2025. Office buildings, once a cornerstone for contractors, have seen dwindling demand as remote work trends persist, pushing up office rental vacancies. Contractors have increasingly leaned on construction of existing buildings, with incentives for energy-efficient window upgrades through the Inflation Reduction Act boosting growth. Still, the One Big Beautiful Bill ending incentives by the end of 2026 may hinder this growth moving forward. Looking ahead, glass and glazing contractors are positioned to capitalize on emerging opportunities, though challenges will persist. Potential inflationary pressures because of tariffs may keep rates high and hinder new residential construction, but construction on existing residential structures may offset some declines. Various commercial markets will boost performance, including hotel, retail and data center construction. While new office building construction will likely lag, conversions to other uses may provide contractors a boost. Yet, contractors must navigate continued pressures, with labor shortages poised to persist, while material costs, notably aluminum and glass, may rise because of tariffs. Environmental concerns regarding energy efficiency could moderate traditional glass designs, though they may also incentivize contractors to adopt advanced technologies like photovoltaic glass. Industry revenue is forecast to increase at a CAGR of 1.8% to total an estimated $26.2 billion through the end of 2030.

Flooring installers have navigated a rocky landscape shaped by shifting interest rates and consumer preferences over the past five years. These tradespeople experienced a significant surge at the onset of the period, buoyed by a residential construction boom driven by low interest rates and a mass movement toward home improvement projects. However, as interest rates climbed, this momentum faltered, leading to a slowdown in residential construction, particularly in single-family homes. Housing starts also declined as interest rates rose significantly. The apartment building market proved more resilient as higher homeownership costs pushed more people towards rentals in 2022, ensuring a steadier demand for flooring installations in multi-unit dwellings. Still, multifamily construction activity slowed in 2023 as rates continued to climb. Despite continued struggles in office building construction as remote and hybrid work environments push up rental vacancies, other commercial spaces like warehouses and hotels have offered growth opportunities. While comprising a small market for flooring installers, growth in industrial building construction contributed to growth in the latter part of the period. Overall, industry revenue has been increasing at a CAGR of 1.3% to $31.7 billion over the past five years, including an expected increase of 0.8% in 2025 alone. Interest rate cuts in the latter part of the period have led to growth in the residential and nonresidential markets. Industry profit has fallen to 5.1% of revenue in 2025 from 5.8% in 2020. Flooring installers have struggled with labor shortages pushing up wage costs, which has hindered profit. An aging workforce has exacerbated these labor shortages, with many seasoned workers retiring and not enough new entrants to fill the gaps. Rising costs for materials haven’t negatively impacted profit as companies passed off increased costs, but higher costs likely disincentivize new projects, contributing to limiting revenue growth. Flooring installers can expect a mix of challenges and opportunities. Lower interest rates will revive new residential construction, with both single-family homes and multifamily units to see increased activity. This comes at a crucial time as younger generations struggle with housing affordability, spurring an enduring need for multifamily housing. While competition from substitutes like tile and concrete flooring intensifies, the sector's inherent complexity ensures continued demand for professional installers. Emerging trends in eco-friendly materials, robotic installation technologies and smart flooring systems will necessitate skill upgrades but promise to enhance efficiency and broaden service offerings. Industry revenue is forecast to climb at a CAGR of 1.3% to $33.8 billion over the five years to 2030.