Construction of Buildings

Construction of buildings (NAICS 236) covers general contractors and operative builders engaged in residential, commercial, industrial, and institutional building projects across the United States. The subsector splits into two primary segments: residential building construction (NAICS 2361), dominated by single-family homebuilders like D.R. Horton, Lennar, and PulteGroup, and nonresidential building construction (NAICS 2362), where firms such as Turner Construction, Hensel Phelps, and Whiting-Turner execute office towers, hospitals, data centers, and manufacturing plants.

The U.S. Census Bureau valued total building construction put in place at approximately $1.1 trillion in 2023, with residential spending accounting for roughly 52% of that figure. The sector is acutely sensitive to interest rates: the Federal Reserve's rate-hiking cycle that began in 2022 sharply curtailed single-family starts, which dropped from 1.12 million units in 2021 to under 950,000 in 2023 before partially recovering. Commercial construction has been reshaped by the post-pandemic office vacancy crisis in cities like San Francisco, Chicago, and New York, where vacancy rates above 20% have stalled new office development while fueling adaptive reuse and conversion projects.

Regulatory frameworks governing building construction vary by jurisdiction but are anchored by the International Building Code (IBC) and the International Residential Code (IRC), adopted with local amendments by most states. Energy code adoption -- particularly the 2021 International Energy Conservation Code -- has tightened envelope and HVAC efficiency requirements, directly increasing per-unit construction costs. Permitting timelines remain a persistent friction point, with the National Association of Home Builders reporting that regulatory costs account for nearly 24% of the price of a new single-family home.