Housing’s Quiet Takeoff: How Construction and Healthcare Are Winning

The U.S. housing market has entered a new phase of growth, driven by a confluence of falling mortgage rates, regional migration trends, and demographic shifts. As of December 2025, home prices rose 0.4% year-over-year, with the median sale price hitting $428,275. While this growth appears modest compared to the pandemic-era frenzy, it signals a stabilization in a market long plagued by affordability crises and supply constraints. For investors, this surge presents a unique opportunity to capitalize on sector rotation—particularly in construction and healthcare—where housing dynamics are reshaping demand and profitability.

The Construction Sector: Navigating Tariffs, Labor Shortages, and Regional Demand

The construction industry has been a mixed bag over the past two years. While nonresidential construction spending grew by 20% in 2023 and 6% in 2024, the outlook for 2025 is more cautious. Tariffs on steel, aluminum, and lumber have pushed material costs up by 5–10%, squeezing margins for developers. Yet, housing price growth and regional migration patterns are creating pockets of resilience.

Consider the Sun Belt states—Florida, Arizona, and North Carolina—where population inflows have surged. These regions are experiencing a boom in housing demand, driven by remote work flexibility and corporate relocations. However, construction activity is constrained by a labor shortage of 450,000–750,000 workers, exacerbated by restrictive immigration policies. This imbalance is driving up wages and project costs, but it also means that existing construction firms with access to skilled labor or innovative automation tools could outperform peers.

For investors, the key is to identify companies that can mitigate these challenges. Firms like Lennar (LEN) and D.R. Horton (DHI), which have streamlined supply chains and adopted modular construction techniques, are better positioned to navigate cost pressures. Additionally, regional builders with a focus on Sun Belt markets—where demand is outpacing supply—could see outsized gains.

Healthcare Construction: A Tailwind from Aging Populations and Migration

The healthcare sector is another beneficiary of housing-driven demand. As the U.S. population ages—particularly the 80+ demographic, which is projected to grow by 30% over the next five years—the need for senior housing, assisted living facilities, and medical office buildings (MOBs) is accelerating. The National Investment Center estimates that 560,000 new senior housing units will be needed by 2030, but current development rates are only adding 191,000 units annually. This supply gap is creating upward pressure on rents and occupancy rates.

Migration patterns are amplifying this trend. Sun Belt states, which are attracting retirees and young professionals alike, are seeing a surge in demand for healthcare infrastructure. For example, Florida and Texas now account for 30% of U.S. job growth, driving the need for new medical facilities and outpatient centers. These regions are also experiencing a shift toward outpatient care, which is more cost-effective than inpatient services and requires modern, well-located facilities.

Investors should focus on real estate investment trusts (REITs) that specialize in healthcare and senior housing. Welltower (WELL) and Ventas (VTR), for instance, have strong portfolios of MOBs and senior housing properties in high-growth Sun Belt markets. These REITs are also benefiting from long-term lease agreements with healthcare providers, providing stable cash flows even in volatile economic environments.

Strategic Positioning: Balancing Risk and Reward

While the construction and healthcare sectors offer compelling opportunities, investors must remain mindful of macroeconomic risks. Rising tariffs, inflation, and potential labor shortages could dampen growth in the short term. However, the structural drivers—aging demographics, Sun Belt migration, and the shift to outpatient care—suggest that these sectors will outperform broader markets over the next five years.

For a diversified portfolio, consider a two-pronged approach:
1. Long-term exposure to healthcare REITs (e.g., WELL, VTR) to capitalize on the aging population and regional demand.
2. Selective investments in construction firms with cost-control measures and regional expertise (e.g., LEN, DHI).

Additionally, investors should monitor regional housing markets for early signs of overbuilding or policy shifts. For example, a potential easing of immigration restrictions could alleviate labor shortages, while a surge in housing supply might temper price growth.

Conclusion: A Market in Transition

The U.S. housing market is no longer a story of explosive growth but one of stabilization and rebalancing. For investors, this transition creates opportunities in sectors that can adapt to the new normal—construction firms that innovate around labor and material costs, and healthcare providers that cater to an aging, mobile population. By aligning with these trends, investors can position themselves to benefit from a market that is reshaping itself in real time.