Value of residential construction

From 2020 to 2025, the US residential construction sector experienced high volatility and a modest net decline, with overall values fluctuating around the $800 billion mark. In 2020, spending stood at $802.2 billion - an elevated level that reflected a surge in pandemic-driven demand for larger homes, extremely low interest rates, and generous federal stimulus. The following year saw explosive growth, with 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 is expected to slip by another 1.1% to $763.22 billion, capping a five-year net decline of 4.9% and a compound annual decrease of about 1.0%. 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 remained 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—2020–2025 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.