With a staggering $45.4 trillion in total market value, U.S. residential real estate is not just an asset class, it’s a national balance sheet. Nearly $31 trillion of that value is homeowner equity, more than the GDPs of China, Germany, and Japan combined. 

That number has swelled thanks to a decade-long bull run in home prices, turbocharged by post-COVID migration, tight supply, and a refinancing wave that locked in sub-4% mortgage rates. While transaction volume has slowed under the weight of 7% mortgage rates, asset values have proven stubbornly sticky.

For private equity and institutional investors, this isn’t just a macro backdrop, it’s a $45 trillion canvas of opportunity and constraint. From build-to-rent strategies to prop tech roll-ups and hard asset plays, firms are reevaluating how they access value in housing without overpaying for stability. 

With housing affordability now at a multi-decade low, demographic tailwind pushing demand, and rising regulatory scrutiny around institutional landlords, timing and structure matter more than ever. Residential real estate may not offer the flashiest IRRs, but in a world where capital is expensive and volatility is the rule, it just might be the anchor PE portfolios need.

Key Takeaways for Investors

• $45.4T in total value makes U.S. residential real estate the largest investable asset class—bigger than U.S. equities or Treasuries.

• $31T in equity highlights the embedded household wealth and low leverage post-2008, providing a cushion against rate shocks.

• Liquidity crunch: High mortgage rates have frozen mobility. Homeowners won’t sell, buyers can’t buy, great for long-hold rental strategies.

• Institutional footprint still small: Despite headlines, institutional owners control just ~2% of single-family rentals, room to scale without backlash if done smartly.

• Build-to-rent (BTR) remains hot: With affordability strained, BTR offers yield, growth, and defensiveness, but land costs and zoning hurdles are gating factors.

• Geographic bifurcation is real: Sunbelt metros still lead in growth and rental demand, but pricing in top-tier markets now reflects institutional competition.

• Tech entry points: Proptech, iBuyer platforms, and rent-to-own models offer exposure without physical ownership risk, though many are still unprofitable.

Regional focus: China Lifts Asia to Residential Real Estate Supremacy

Asia now accounts for $242.9 trillion in residential real estate value, the largest regional market globally, surpassing Europe and the Americas by a wide margin. The bulk of this heft comes from China, where a vast population, rapid urbanization, and high rates of homeownership have transformed real estate into both a store of wealth and a policy lever. Even amid a cooling market, China’s sheer scale continues to anchor Asia’s dominance.

By contrast, Europe and the Americas clock in at $169.8T and $162.1T, respectively, material markets, but with less demographic momentum. Africa, despite its growth rate, remains relatively small at $18.7T, though it saw a 46.6% YoY increase, signaling longer-term opportunity. 

Asia’s lead underscores an important reality: for global allocators and asset-backed strategies, understanding China is no longer optional, it’s foundational.

Key insights from chart

• Asia leads globally with $242.9T in residential real estate, driven largely by China's urban concentration and ownership culture.

• China alone accounts for ~60% of Asia’s total residential value—underscoring the country’s systemic influence on global housing.

• Africa’s market grew 46.6% YoY, the fastest of any region, suggesting future frontier-market opportunities despite its current small size.

• Americas and Europe remain stable, but growth rates lag Asia—making them attractive more for income and stability than secular growth.

• Regional concentration risk is real: any disruption in China’s housing market (e.g., Evergrande-style contagion) can ripple through global asset pricing.

U.S Homes: Existing Homes Are Waking Up, and Pulling the Market with Them

After two years of punishing rate hikes, frozen inventory, and sidelined buyers, the U.S. housing market is starting to stir. The headline? Sales volume is rebounding, slowly, but the momentum is coming almost entirely from existing homes. 

From a trough of 4.06 million existing home sales in 2024, the market is projected to climb back to 4.54 million by 2026, marking a nearly 12% recovery. That shift, while modest, signals improving sentiment and a gradual easing of the so-called “mortgage rate lock-in effect” that has paralyzed homeowner mobility since the Fed’s tightening cycle began.

Meanwhile, new home sales have shown impressive consistency, holding between 640K and 690K units annually since 2022. This stability has been a key lifeline for overall housing liquidity, driven by builders offering rate buydowns and incentives to draw buyers who can’t compete in the resale market. 

But make no mistake: the real volume lever is the existing home market, which accounts for roughly 85–90% of total transactions. A thaw in that segment matters not just for housing data watchers, but for institutional landlords, residential REITs, and PE-backed platforms betting on U.S. housing as a long-term secular trade.

Key takeaways for investors

• Total U.S. home sales expected to rise from 4.75M in 2024 to 5.20M by 2026, driven primarily by a recovery in existing home transactions.

• Existing home sales forecasted to grow nearly 12%, from a low of 4.06M in 2024 to 4.54M in 2026,an early signal of returning seller confidence.

• New home sales holding steady: at ~0.66M annually since 2022, offering reliable volume as resale inventory remained tight.

• Mortgage rate entrenchment is beginning to soften: As homeowners accept a “new normal” in financing costs, listings are expected to rise incrementally.

• Builder-led growth may plateau as construction margins tighten and consumer preference shifts back to location-driven existing inventory.

• PE implications: Platforms focused on iBuying, fix-and-flip, and resale arbitrage may see renewed opportunity in markets where listing volume picks up.

• Still a fragmented recovery: Markets like Phoenix and Charlotte may outperform on transaction growth, while high-cost metros like SF and NYC remain supply-constrained.

A High Plateau in U.S. Homeownership, But Pressure Is Mounting

The U.S. homeownership rate has hovered in a tight band between 65.1% and 66.6% since 2020, defying the volatility seen in home prices, interest rates, and supply dynamics. At face value, the headline suggests resilience, but underneath it lies a brewing divergence. Ownership has plateaued not because buying has become easier, but because the alternative, renting, has also become unaffordable. 

The U.S. is in a structural standoff: buyers are boxed out by cost, yet the ownership rate remains sticky, propped up by aging demographics and pandemic-era refinancing that locked millions into low-rate mortgages.

What’s missing is upward mobility. Younger buyers, first-time homeowners, and minority households are increasingly sidelined, while investor-driven single-family rental (SFR) models and institutional landlords expand their footprint. As of 2025, 34.9% of U.S. housing units are rented, down from pandemic-era highs, but still elevated compared to pre-2008 norms. 

For PE-backed housing platforms, this environment presents a tension: rental demand is structurally strong, but regulatory scrutiny is intensifying. The future of U.S. housing is less about the “great reshuffle” and more about a generational bottleneck—one that investors must price in.

Key insights for investors

• U.S. homeownership rate remains stable at 65.1% in 2025, down slightly from the pandemic peak of 66.6% in 2020.

• Renters still make up nearly 35% of the market, reflecting persistent affordability barriers and growing structural rental demand.

• Millennials and Gen Z are aging into prime homebuying years, but locked inventories, high rates, and tighter credit standards are blocking entry.

• Institutional landlords face dual exposure: strong tailwinds from rental demand but rising pushback from policymakers on large-scale ownership models.

• Flat homeownership signals income bifurcation, higher-income households are consolidating ownership, while others rent by necessity.

• PE and real estate strategies must adapt: Build-to-rent, rent-to-own, and shared equity models are emerging as scalable solutions in a market that isn’t normalizing anytime soon.

• State-level regulatory divergence matters: Rent control, zoning reform, and ownership restrictions are proliferating, investors need local policy intelligence.

Speed Still Sells, New Homes Move Fast in the U.S. Market

In a housing market defined by affordability constraints and rate-driven volatility, new construction remains one of the few pressure-release valves, and it’s moving quickly. In 2024, 686K new homes are projected to sell, with over 50% of those already completed at time of sale, a dramatic jump from just 27% in 2023. 

The shift reflects both increased builder inventory and buyer preference for immediate occupancy as uncertainty around rates and timelines persists.

Despite rising completions, new homes aren’t sitting on the market long. Median time on the market is just 2.6 months, only marginally up from 2.5 months in 2023. That’s remarkably tight when compared to pre-pandemic norms. 

Meanwhile, builders have also reduced speculative exposure: homes “not started” at time of sale fell from 103K in 2023 to 95K in 2024, indicating disciplined construction pipelines and an emphasis on de-risking development. In short: new supply is being absorbed almost as fast as it hits the market.

Key takeaways from chart

• 686K new home sales expected in 2024, up from 666K in 2023—a stable volume base despite rate headwinds.

• Completed homes sold during period surged to 350K in 2024, double the 178K sold in 2023, signaling demand for move-in-ready inventory.

• Homes not yet started fell to 95K, suggesting tighter speculative building activity and a more cautious land deployment strategy by developers.

• Median time on market remains low at 2.6 months, confirming that demand is still outpacing supply in key segments.

• Inventory efficiency is high: Over 70% of homes for sale at period-end are either under construction or already completed.

• Implication for PE: Build-to-sell models remain viable where zoning and speed-to-market are favorable. Investors should prioritize partners with proven cycle time discipline and local permitting expertise.

• Forward concern: Margin compression may increase as builders complete projects in softening price environments. Watch for shifts from for-sale to for-rent conversions.

Sources & References

Statista.Residential Real Estate Market Size. https://www.statista.com/markets/460/topic/599/residential-real-estate/

Census. Residential Real Estate News. https://www.census.gov/construction/nrs/pdf/newressales.pdf

NAR. Single family residential. https://www.nar.realtor/sites/default/files/2025-04/ehs-03-2025-single-family-only-2025-04-24.pdf

NAR. Housing Affordability. https://www.nar.realtor/sites/default/files/2025-02/hai-q4-2024-quarterly-housing-affordability-2025-02-06.pdf