Value of residential construction

The value of residential construction is set to fall -0.7% in 2026 to reach $749.62 billion. From 2021 through 2026, the US residential construction sector experienced an overall decline, falling at an annualized rate of -3.3%. 2021 saw explosive growth, with the value rising 10.6% to $887.40 billion as buyers rushed to capitalize on attractive financing and remote work further fueled demand for suburban housing and home expansions.

This boom proved unsustainable, however, as sharply rising interest rates in 2022 triggered an 8.3% contraction to $814.10 billion. Higher mortgage costs quickly eroded affordability, dampened homebuyer enthusiasm, and led builders to scale back new projects in many markets. The slowdown deepened in 2023, with an 8.1% drop to $748.50 billion. This reflected not only elevated borrowing costs but also persistent supply chain issues, higher materials prices, and subdued builder sentiment nationwide.

Despite some stabilization in 2024—the sector managed to edge up 3.1% to $771.90 billion—residential construction never regained the momentum of its 2021 peak. In 2025, value slipped by another -2.2% to $754.90 billion. These results underscore how sensitive residential construction is to broader macroeconomic changes, especially shifts in monetary policy and consumer confidence. The 2021 high marked a swift rebound from the pandemic, but the sector remains below its historical peak of $818.30 billion reached in 2007, prior to the financial crisis.

The post-pandemic construction boom and subsequent retrenchment mirrored the interaction of changing homebuyer preferences, tightening credit standards, and lingering cost inflation. Unlike the late 2010s—which saw stronger, steady performance—2021–2026 was defined by rapid upswings and corrections. Regional disparities were pronounced, with the most severe effects in areas where labor and land were more constrained, or where affordability pressures were already high. Housing completions and new starts reflected similar swings, with strong activity early in the period giving way to hesitancy and cancellations in later years.