Objective: The Chinese government has emphasized the active promotion of steel-structure (SS) residential buildings as a key strategy in its 14th Five-Year Plan for the construction industry to support national carbon neutrality goals. Despite this policy support, a comprehensive understanding of the relative environmental advantages of SS housing compared with traditional reinforced concrete structure (RCS) buildings remains limited, particularly regarding embodied carbon emissions during the materialization stage. Thus, this study aims to systematically quantify and compare the embodied carbon emissions of SS and RCS residential buildings across three typical building heights (6, 18, and 32 stories) and evaluate their carbon reduction potential under current conditions and anticipated upstream technological improvements in material production. Our findings seek to offer scientific evidence to inform structural design choices and promote low-carbon residential construction in China. Methods: This study focused on embodied carbon emissions generated during the materialization stage, including raw material extraction and production, material and equipment transportation, and on-site construction activities. A process-based emission factor approach compliant with the Chinese national standard (GB/T 51366—2019) was employed. Structural designs for typical residential buildings at the three specified heights were developed through expert consultation, applying relevant Chinese codes for fire protection, seismic resistance, and elevator requirements, all of which influence material use intensity. The major construction materials considered were concrete, steel reinforcement, structural steel, and masonry blocks. The carbon emission factors for these materials were calculated under two scenarios: business-as-usual (BAU), reflecting current production technologies, and greener material (GM), which incorporates expected advances such as clinker substitution in cement, steel recycling, improved energy efficiency, and decarbonization of electricity generation. Embodied carbon from transportation and construction phases was estimated proportionally to material production emissions using empirically derived coefficients from prior studies. Results: Under the current BAU scenario, the embodied carbon emissions per unit floor area increased with the building height for both SS and RCS structures. For six-story buildings, SS structures showed a 4.3% reduction in embodied emissions compared with RCS structures, whereas the embodied emissions of SS structures exceeded those of RCS structures by 4.2% and 13.3% for 18 and 32-story buildings, respectively. These differences could be attributed to conservative design codes and the high carbon intensity of current steel production. In contrast, under the GM scenario, carbon emission factors for concrete and steel decreased by approximately 21.5% and 59%, respectively. This led to a 35% reduction in embodied carbon for RCS buildings and an even greater reduction of up to 46% for SS buildings. The enhanced mitigation effect for SS buildings was largely driven by the significant share of steel in their embodied emissions, which benefited disproportionately from upstream technological improvements in material production and energy systems. Conclusions: Embodied carbon emissions during the materialization stage are substantially influenced by technological advancements in upstream sectors such as energy and manufacturing. As these sectors transition toward greener production, SS residential buildings are projected to achieve substantially greater carbon reduction potential than RCSs, especially for high-rise buildings where steel usage is intensive. Effective collaboration between the construction industry and upstream material producers, along with optimized structural design codes without compromising safety, is essential to fully realizing the low-carbon advantages of steel structures.