US Real Estate Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 414,970 establishments in the real estate sector are involved in the purchase, sale, rental, leasing, and management of properties. Establishments typically specialize in a particular type of property, such as residential, commercial, or industrial.
Dependence on Credit
The real estate sector is capital-intensive and highly dependent on credit.
Maintaining Occupancy
For commercial and residential lessors, maintaining occupancy is critical to generating steady streams of rental income, which are necessary to cover operating expenses and debt costs.
Industry size & Structure
The real estate sector is comprised of 414,970 establishments that employ more than 1.9 million workers and generate $690 billion in annual revenue, according to government sources.
- The real estate sector represents 10% of the nation's Gross Domestic Product (GDP). The real estate sector employs 1.2% of the country's workers.
- The sector is fragmented with the 20 largest firms representing 13% of revenue.
- In addition to employer establishments, the real estate sector has 2.9 million owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are lessors of real estate (43%) and offices of real estate agents and brokers (30%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
- The real estate sector has shed about 27,000 establishments annually, which equals about 9.6% of existing establishments. However, the sector has added about 36,000 new establishments annually, which is equivalent to 12.7% of existing establishments. As a result, the sector has an average growth rate of 3.1%.
- The real estate sector is forecast to grow its employment base by 4% overall in 2023-2033, which is the same as the national average for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Real Estate Sector Industry Growth
Recent Developments
Mar 12, 2025 - Home Builders Beef Up Inventories Ahead of Tariffs
- Some home builders are buying up extra lumber, fixtures, appliances, and other materials ahead of Trump administration tariffs, but the strategy could prove risky if high home prices keep buyers away, according to The Wall Street Journal. Some builders are pivoting to less expensive materials or reducing home sizes to offset the potential rise in materials costs brought on by tariffs. Industry observers suggest large home builders are better shielded from tariff-related uncertainty as their size gives them greater buying power to resist price hikes. However, smaller builders are more vulnerable. Building stockpiles of supplies presents risks for builders and distributors if demand dips and they are stuck holding unsold inventory. The National Association of Home Builders estimates that tariffs could increase the cost of building a single-family home by $7,500 to $10,000.
- Affordability in the US housing market is expected to improve slightly in 2025 and 2026, but strides will be due to falling interest rates rather than lower home prices, according to a recent Reuters poll of property market insiders. Nearly two-thirds (62%) of those surveyed in February 2025 said that affordability conditions for first-time home buyers would improve over the coming year. Polling medians suggested survey respondents expect average 30-year mortgage rates to drop to 6.76% in 2025 and 6.32% in 2026. While home prices are expected to continue rising, the pace of price growth will slow. Moody’s Analytics estimates there is a shortage of about 2.6 million units. Homeowners who locked in low mortgage rates before they began rising are reluctant to sell, leaving potential buyers relying more on the new home market.
- High costs for financing reduced the development of single-family built-for-rent (SFBFR) construction activity in the fourth quarter of 2024 compared to a year earlier, according to National Association of Home Builders analysis of US Census Bureau data. In Q4 2024, there were about 15,000 SFBFR housing starts, down 38% from Q4 2023. However, during the four most recent quarters, 83,000 SFBFR homes began construction, which is up 8% compared to how many were built in the previous four-quarter period. While the historical four-quarter moving average market share for SFBFR is about 2.7% (1992-2012), SFBFR’s current share of the overall single-family market is about 8%. Single-family built-for-rent homes provide an alternative for consumers who want more space but are challenged by a lack of affordable housing inventory and downpayment requirements in the for-sale market.
- Some investors are warming up to US office real estate after souring on the market for five years, according to The Wall Street Journal. Buyers are scooping up properties with high vacancies for bargain prices, and others are buying premium properties saddled with high debt. Investors are also purchasing older properties to convert them into apartments. According to data firm MSCI, office building sales volumes rose 20% in 2024, reaching $63.6 billion. However, 2024 activity is still well below the average annual volume of $142.9 billion from 2015 to 2019. Industry watchers suggest that leasing activity is picking up as more companies require workers to be in the office. While the office market is showing signs of improvement, it still faces high vacancy rates and loan delinquencies, leading many investors to prefer other real estate types, such as warehouses and apartments.
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