Assessment of a society's environmental load is one of the important tasks when creating a sustainable society. The authors of this paper assessed CO2 emissions and forest resource sustainability for the housing construction taking place in Malaysia using an Input-Output analysis. Common housing types such as apartments and terraced houses were assessed. The findings showed that the main sources of CO2 emissions during the construction phase were generated in the building components, such as building structures and foundations. The forest resource sustainability will be sustained under certain conditions, even if timber housing construction is to be promoted. This paper also discusses the methods for both CO2 reductions and forest resource sustainability. © The Author 2009. Published by Oxford University Press.