Incorporating sustainability concepts at all decision-making stages in the construction of residential buildings is essential to maximize benefits without compromising functionality. This study aimed to identify and analyze the obstacles hindering the application of Agile Project Management (APM) in residential construction projects. The research specifically addressed the following questions: What are the key barriers to APM adoption in Nigerian residential construction projects? How do these barriers impact the effectiveness of APM in promoting sustainability? A questionnaire survey was distributed to 120 construction professionals in Nigeria, capturing insights on APM challenges. Exploratory factor analysis was employed to categorize these obstacles into four main areas: social, economic, human factors, and culture and expectations. Subsequently, partial least squares-structural equation modeling was used to construct a model assessing the significance of these barriers. The findings revealed that economic factors, with a statistical significance coefficient of 0.516, are the most significant barriers to APM adoption. Social factors, cultural expectations, and human factors also play notable roles, though to a lesser extent. The outcomes provide valuable guidance for decision-makers in Nigeria’s construction sector, emphasizing the need for strategies that address economic constraints and foster greater adoption of APM practices to achieve cost reduction and enhanced sustainability.