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The US Residential Construction Market size is forecast to increase by USD 231.92 billion at a CAGR of 4.45% between 2023 and 2028. The growth of the market is significantly influenced by various factors, including the escalating rates of household formation, favorable governmental policies and incentives aimed at bolstering the real estate sector, and the concurrent rise in economic growth coupled with an increase in disposable income across the United States. These elements collectively contribute to a robust demand for residential properties, stimulating construction activities and driving growth within the real estate market. Additionally, the implementation of supportive policies and incentives encourages investment in real estate ventures, fostering a conducive environment for market expansion and development in the US. Our report examines historic data from 2018 - 2022, besides analyzing the current and forecasts market scenario.
Moreover, the Alliance Residential Co specializes in residential construction, seamlessly integrating development and construction processes to provide comprehensive services from project planning to project completion. On the other hand, BEAZER HOMES USA INC. focuses on residential construction, offering customizable floor plans, energy-efficient homes, and assistance with mortgage comparisons.
Market Forecast 2024-2028
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The market in the US is driven by several key factors, including the Affordable Housing trend, Federal funds rate, and Mortgage rates. Trends such as Double-digit growth in Construction Spending and increased Housing starts highlight a robust market. However, challenges such as Housing supply constraints, Labor market shortages, and the potential impact of the Recession and Inflation pose significant hurdles. Organizations like the National Association of Home Builders and government programs like Housing Choice Vouchers are addressing these challenges, but ongoing adaptation is crucial. Our researchers studied the market research and growth data for years, with 2023 as the base year and 2023 as the estimated year, and presented the key drivers, trends, and challenges for the market.
One main factor contributing to the heightened household formation rates is the enhanced economic conditions. With an expanding job industry, increasing wages, and favorable economic indicators, more individuals and families are confident in their financial stability, prompting them to establish independent households. In addition, this increased confidence is translating into a higher demand for new homes and apartments across the US.
Moreover, demographic shifts are playing a crucial role in shaping the market in the US. In addition, the millennial generation between 25 to 50 years of age, who are in their prime age financially for home-buying, is a driving force behind the increased household formation rates. Furthermore, as millennials prioritize homeownership and family life, there is a growing need for housing options that cater to their preferences and lifestyle choices. Hence, such factors are driving the market during the forecast period.
One main driver of the rising focus on sustainability in the market in the US is the increasing demand from homeowners for energy-efficient and eco-friendly homes. In addition, with a greater understanding of the environmental impact of traditional construction methods, consumers are seeking sustainable alternatives that reduce their carbon footprint. Furthermore, this has led to a surge in the adoption of green building practices and technologies such as solar panels, energy-efficient insulation, and eco-friendly building materials.
Moreover, government initiatives and incentives have also played a crucial role in promoting sustainability in the market in the US. In addition, various states offer tax credits and rebates for homeowners and builders who incorporate green technologies and practices. Furthermore, this not only encourages sustainable construction but also stimulates market growth by making eco-friendly choices more economically attractive. Hence, such factors are driving the market during the forecast period.
One of the main complexities faced by the market in the US is the increase in material costs. In addition, the prices of key construction materials, such as lumber, steel, and concrete, have experienced unprecedented spikes. For example, the price of lumber witnessed a sharp increase in prices during 2021, driven by factors such as supply chain issues, labor shortages, and increased demand for housing.
Moreover, this rise in material costs has placed immense pressure on construction budgets, impacting profit margins and increasing the overall cost of residential projects. In addition, the COVID-19 pandemic from 2020 exposed vulnerabilities in global supply chains, disrupting the timely and consistent flow of materials required in the US. Hence, such factors are hindering the market during the forecast period.
The market in the US is undergoing significant segmentation, influenced by various factors such as the Affordable Housing trend, Federal funds rate, and Mortgage rates. These elements directly impact the Housing supply and the overall Economy, which in turn affect Residential investment and the Labor market within the construction industry. In recent years, Construction Spending has shown double-digit growth, albeit with challenges such as a fluctuating Cancellation rate. Organizations like the National Association of Home Builders closely monitor Housing starts, Building permits, and the demand for Single-family homes and New homes. Home buyers are navigating a landscape shaped by the Federal government spending package, which includes initiatives like Housing Choice Vouchers, Project-Based Rental Assistance, Homeless Assistance Grants, Public Housing Operating Funds, Native American housing block grants, and programs like Housing for Persons with AIDS and Fair housing programs under HUD. These HUD programs play a pivotal role in addressing housing needs across various segments of the population.
The apartments and condominiums segment is estimated to witness significant growth during the forecast period. Apartments and condominiums segments share similarities in terms of their multi-unit nature, but they differ in ownership structure. In addition, apartments are typically owned by a single entity, often a property management company, while condominiums consist of individually owned units within a larger complex. Furthermore, both contribute significantly to the market in the US, reflecting changing preferences and lifestyle choices in the US.
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The apartments and condominiums segment was the largest segment and was valued at USD 493.78 billion in 2018. Moreover, one notable driver for the growth of this segment is the increasing trend towards urbanization. In addition, as more people seek the convenience and amenities associated with urban living, the demand for well-designed, high-rise apartment buildings and condominium complexes has surged. Furthermore, developers are responding to this demand by creating modern, sustainable, and community-oriented living spaces. Hence, such factors are fuelling the growth of this segment which in turn drives the market during the forecast period.
Based on the type, the market has been segmented into new construction and renovation. The new construction segment will account for the largest share of this segment. New construction is a major segment within the market in the US. In addition, one prominent category within new residential construction is single-family homes. Moreover, these standalone structures offer families the privacy and space they desire. In addition, builders such as D.R. Horton and Lennar Corporation are prominent players in this sector, consistently delivering innovative designs and modern amenities to meet evolving consumer demands. Furthermore, another noteworthy type is multi-family construction, comprising apartments, condominiums, and townhouses. In addition, the growing trend towards urbanization and the desire for more affordable housing options have fueled the demand for multi-family units. Hence, such factors are fuelling the growth of this segment which in turn drives the market during the forecast period.
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
D. R. Hortons Inc: The company offers residential construction such as smart homes that includes a video doorbell, programmable thermostat, a door lock, a smart light switch, a touchscreen smart home control device, and home security devices.
We also have detailed analyses of the market’s competitive landscape and offer information on 20 market companies, including:
ATCO Ltd., DRB Homes, Greystar Worldwide LLC, Hensel Phelps, HOCHTIEF AG, Hovnanian Enterprises, KAUFMAN and BROAD, Kiewit Corp., Lennar Corp., M/I Homes Inc., Meritage Homes Corp., Mill Creek Residential, NVR Inc., Pultegroup Inc., Taylor Morrison Inc., and TOLL BROTHERS INC.
Technavio market forecast the an in-depth analysis of the market and its players through combined qualitative and quantitative data. The analysis classifies companies into categories based on their business approaches, including pure-play, category-focused, industry-focused, and diversified. Companies are specially categorized into dominant, leading, strong, tentative, and weak, based on their quantitative data analysis.
The market analysis and report forecasts market growth and provides a market growth analysis of the latest trends and growth opportunities from 2018 to 2028.
The market is influenced by a myriad of factors, including the Affordable Housing trend, Federal funds rate, and Mortgage rates. The Housing supply dynamics, closely tied to the Economy and Residential investment, play a crucial role. Labor market conditions, Inflation, and decisions by the Federal Reserve regarding Interest rates greatly impact this market. Memories of the Recession still affect decision-making in both the Construction sectors and the Commercial and industrial buildings sphere. Challenges persist, ranging from Costs of materials, fulfillment, labor, and land to Cancellation rates.
However, organizations like the National Association of Home Builders track Housing starts and Building permits, gauging Home buyers' sentiments. Initiatives such as Housing Choice Vouchers and Project-Based Rental Assistance highlight efforts to address affordability issues. HUD programs and the Community Development Block Grant formula program further this cause. The interplay of epidemics, historical events like the Great Recession, and factors like remote employment and migrant movements shape the residential construction activity, making it a complex yet vital sector within the broader economy.
Moreover, the market has been witnessing remarkable growth in recent years, with construction spending reaching new heights in nominal terms. Both the residential and non-residential sectors have experienced double-digit growth, fueled by favorable factors such as a lower cancelation rate and a substantial federal government spending package. Initiatives like Homeless Assistance Grants, Public Housing Operating Funds, and Native American housing block grants have contributed to this positive trend, alongside programs like Housing for Persons with AIDS and Fair housing programs. The HOME Investment Partnerships Program has also played a crucial role in boosting residential construction. In the broader North America Market, savings from previous generations are being tapped into, with mortgages being a key financing tool supported by banks adapting to changing regulations and down payments. Government stimulus programs have further bolstered asset values and spurred a purchasing frenzy in the market, leading to increased industry spending on home supplies.
Market Scope |
|
Report Coverage |
Details |
Page number |
137 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 4.45% |
Market Growth 2024-2028 |
USD 231.92 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
4.15 |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Alliance Residential Co., ATCO Ltd., BEAZER HOMES USA INC., D. R. Hortons Inc., DRB Homes, Greystar Worldwide LLC, Hensel Phelps, HOCHTIEF AG, Hovnanian Enterprises, KAUFMAN and BROAD, Kiewit Corp., Lennar Corp., M/I Homes Inc., Meritage Homes Corp., Mill Creek Residential, NVR Inc., Pultegroup Inc., Taylor Morrison Inc., and TOLL BROTHERS INC. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements. Get in touch
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Product
7 Market Segmentation by Type
8 Market Segmentation by Application
9 Customer Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
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