NEW YORK, Feb. 2, 2025 /PRNewswire/ -- Report on how AI is redefining market landscape - The residential construction market in US size is estimated to grow by USD 242.9 million from 2025-2029, according to Technavio. The market is estimated to grow at a CAGR of 4.5% during the forecast period. Increasing household formation rates is driving market growth, with a trend towards rising focus on sustainability in residential construction projects. However, skilled labor shortages for large-scale residential real estate projects poses a challenge. Key market players include 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., MI Homes Inc., Meritage Homes Corp., Mill Creek Residential, NVR Inc., and Pultegroup Inc..

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Key Market Trends Fueling Growth

The US residential construction market is currently experiencing an affordable housing trend, driven by the need for more affordable options for home buyers. The Federal Reserve's decision to keep the federal funds rate low has helped keep mortgage rates down, making it easier for buyers to secure loans. However, housing supply remains a challenge, with industry spending on home construction activity increasing in nominal terms but still not keeping up with demand. The economy, labor market, and inflation are key factors impacting the residential investment sector. The Federal Reserve's interest rate decisions, the possibility of a recession, and the construction sectors' spending patterns are all closely watched indicators. The cancellation rate for housing starts and building permits for single-family homes has been relatively low, indicating strong demand for new homes. Millennials, who make up a significant portion of home buyers, are driving the market, with many looking to purchase their first homes. Fair housing programs and HUD programs are essential to ensuring equal access to housing for all individuals. The ongoing epidemic and the shift to remote employment and migrant movements have also influenced the real estate market. The median price of single-family homes has seen double-digit growth in some areas, making it challenging for some buyers to afford homes. Mortgage rates, down payments, asset values, and borrowing rates are all important considerations for home buyers. Regulations, such as lending guidelines, mortgage insurance, credit score requirements, and debt service caps, also impact eligibility for mortgages. The vaccination rates and labor economy are crucial indicators for the housing market's future. The social catastrophe caused by the pandemic has highlighted the importance of intergenerational living circumstances and the need for affordable housing options for younger generations. The non-residential sector's performance also affects the residential sector, as it impacts employment and income levels. The Canadian real estate market, with its close ties to the US market, is also worth monitoring, with Canadian home buyers looking at mortgage rates and the Bank of Canada's borrowing rates. Bond yields and lending guidelines are also essential indicators for the housing market. 

The residential construction market in the US is witnessing a significant shift towards sustainability. Homeowners are increasingly demanding energy-efficient and eco-friendly homes, leading to the adoption of green building practices and technologies. Solar panels, energy-efficient insulation, and sustainable materials are becoming popular choices. Government initiatives, including tax credits and rebates, are also encouraging the use of green technologies and practices. This trend is expected to continue, as consumers become more conscious of the environmental impact of traditional construction methods. The residential construction industry is responding by offering more sustainable solutions to meet the growing demand. 

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Market Challenges

• The residential construction market in the US is currently facing several challenges. The affordable housing trend puts pressure on builders to construct more homes at lower prices. The Federal Reserve's federal funds rate and mortgage rates impact borrowing costs for home buyers. Housing supply struggles to keep up with demand due to the economy and residential investment. The labor market, inflation, and recession also affect construction sectors' spending in nominal terms. Construction spending saw double-digit growth but was hindered by cancelation rates and a decrease in housing starts and building permits for single-family homes. Home buyers face challenges with fair housing programs and HUD programs due to the epidemic, millennials' savings, and previous generations' asset values. Remote employment and migrant movements contribute to changing living circumstances for younger generations. The real estate market experiences a purchasing frenzy, driving up median home prices. Canadian home buyers and mortgage rates influence the industry, with the Bank of Canada setting borrowing rates and lending guidelines. Mortgage insurance, credit score requirements, and debt service caps impact eligibility, while mortgage stress tests ensure affordability. Fixed-mortgage rates and bond yields play a role in borrowing and home construction activity. Vaccination rates and the labor economy's recovery are crucial for a social catastrophe recovery. The non-residential sector's spending also affects the residential sector. Individuals living together in homes in Mexico and national statistics office data provide context for the global housing market. Single-family home sales and median prices continue to be closely monitored.
• The US residential construction market confronts a pressing issue: a labor shortage of skilled workers. This predicament significantly impacts large-scale residential real estate projects, causing delays, elevated costs, and compromised quality. The labor shortage stems from multiple sources, including an aging workforce, inadequate training programs, and the ongoing impact of the COVID-19 pandemic, which intensified workforce departures. In 2023, the construction sector required approximately 723,000 new workers yearly to fulfill market requirements. However, the labor pool has not grown commensurately, resulting in project setbacks and heightened labor expenses.

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Segment Overview

This residential construction market in US report extensively covers market segmentation by

• Product
• • Apartments And Condominiums
  • Villas
  • Other Types
• Type
• • New Construction
  • Renovation
• Application
• • Single Family
  • Multi-family
• Geography
• • North America

1.1 Apartments and condominiums- The residential construction market in the US is experiencing significant growth in the apartment and condominium segment. These multi-unit structures share similarities, but differ in ownership structure. Apartments are typically owned by a single entity, often a property management company, while condominiums consist of individually owned units within a larger complex. Both types of developments cater to changing preferences and lifestyle choices in the US, particularly the increasing trend towards urbanization. Notable drivers for growth include the convenience and amenities associated with urban living, leading to the construction of modern, sustainable, and community-oriented high-rise buildings. In tech-driven cities like San Francisco and Seattle, developers are constructing condominiums with smart home features, communal workspaces, and recreational facilities to cater to young professionals. Successful projects, such as the Hudson Yards development in New York City, encompass both residential and commercial spaces and reflect the evolving expectations of urban dwellers. These factors will fuel the growth of the residential construction market in the US during the forecast period.

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Research Analysis

The Residential Construction Market in the US is experiencing a significant trend towards Affordable Housing, with a focus on providing housing solutions for low-income families. The Federal Funds Rate and Mortgage Rates have a direct impact on the market, with higher rates making it more expensive for home buyers to secure financing. The economy, Residential Investment, and Labor Market are also crucial factors, with a strong economy leading to increased demand for new homes. Housing Supply remains a challenge, as the construction sector struggles to keep up with demand, leading to concerns about Double-digit growth in Housing Starts and Building Permits. The Federal Reserve's Interest Rates and the potential for a Recession also loom large, as they can impact both the supply and demand sides of the market. The Cancelation Rate for new home sales is another area of concern, as it can indicate buyer uncertainty or market instability. The construction of Single-Family Homes and New Homes continues to be a focus, with Home Buyers looking for affordable and quality options. Federal programs such as Housing Choice Vouchers, Fair Housing programs, and HUD programs play a vital role in ensuring access to affordable housing for all.

Market Research Overview

The residential construction market in the US is currently experiencing a trend towards affordable housing, driven by increasing demand from millennials and individuals living together in response to changing economic circumstances. The Federal Reserve's federal funds rate and mortgage rates play a significant role in the market, with the former influencing borrowing rates and the latter impacting home affordability. The economy, housing supply, and labor market are also key factors. The economy's recovery from the epidemic and the Federal Reserve's monetary policy decisions will influence residential investment and construction spending. The labor market's health will impact construction activity, while inflation and interest rates can affect affordability and borrowing. The housing market has seen in demand, leading to double-digit growth in housing starts and building permits for single-family homes and new homes. Home buyers are facing challenges with fair housing programs and HUD programs, as well as high asset values and down payment requirements. The industry is also dealing with cancelation rates, borrowing rates, and home construction activity, which can be influenced by vaccination rates, the labor economy, and social catastrophes. The intergenerational group's living circumstances and purchasing frenzy have led to increased industry spending on home supplies and borrowing. The non-residential sector has also seen significant activity, with individuals and families seeking to work and live remotely, leading to migration movements and changes in the real estate market. The Canadian real estate market and mortgage rates are also impacting the US market, with inflation rates and borrowing guidelines affecting affordability.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Product
• • Apartments And Condominiums
  • Villas
  • Other Types
• Type
• • New Construction
  • Renovation
• Application
• • Single Family
  • Multi-family
• Geography
• • North America

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

Contacts

Technavio Research
Jesse Maida
Media & Marketing Executive
US: +1 844 364 1100
UK: +44 203 893 3200
Email: media@technavio.com
Website: www.technavio.com/

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SOURCE Technavio