Drywall and Insulation Contractors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 19,300 drywall and insulation contractors in the US perform drywall work, plaster work, and building insulation work for residential and nonresidential buildings. They may also install ceiling tiles, perform fireproofing work for buildings, and do framing or painting work. Work is performed for new building construction, renovations and additions to existing buildings, and maintenance and repair of existing installations.

Dependence on Construction Activity

Demand for drywall and insulation contractors is highly dependent on residential and nonresidential construction activity.

Reliance on Immigrant Workers

The construction industry in general and drywall and insulation contractors in particular, are highly dependent on immigrant workers to fill lower skilled positions.

Industry size & Structure

The average drywall and insulation contractor operates out of a single location and generates $2.3 million in annual revenue.

    • The drywall and insulation contractor industry in the US consists of about 19,300 companies that employ 247,100 workers and generate $45 billion in annual revenue.
    • The industry consists primarily of small companies - 61% of firms have less than five employees.
    • Small firms may specialize in residential or commercial construction, while larger firms typically target both markets.
    • Major US companies include KHS&S, Performance Contracting Group, Standard Drywall, Inc. and The Raymond Group.
                                Industry Forecast
                                Drywall and Insulation Contractors Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Oct 14, 2024 - New Home Sales Drop
                                • New single-family home sales fell 4.7% month-over-month but were up 9.8% year-over-year in August 2024, according to the US Department of Commerce. Some potential home buyers stayed on the sidelines ahead of an anticipated interest rate cut, according to the National Association of Home Builders (NAHB). In mid-September 2024, the Federal Reserve announced a half-percentage point rate cut. The NAHB suggests home builder sentiment is improving amid expectations that the Fed’s credit-easing cycle will continue. However, falling interest rates may increase competition between home builders and existing homeowners who’d previously felt locked in by their low interest rates.
                                • North American construction and engineering spending in 2024 is expected to grow by about 5%, according to FMI’s fourth-quarter 2024 North American Engineering and Construction Outlook. With growth of 29%, public safety will lead 2024 nonresidential building construction, followed by manufacturing (21%), amusement and recreation (10%), transportation (5%), educational (4%), and religious (2%). Commercial construction spending is expected to decline 8% in 2024 amid weaker demand for warehousing space. Lodging construction spending is forecast to drop 6%, and stubbornly high office vacancies will continue to weigh on new office construction, which is projected to see spending rise by 1% in 2024. Despite favorable demographic trends, project delays for some private hospital developments will cap healthcare construction spending growth at 1% in 2024. Amid moderating interest rates, single-family construction spending is forecast to rise 5% in 2024 as new home affordability remains competitive with existing home prices. Multifamily spending is expected to decline by 4% in 2024 amid a recent wave of fresh inventory. The rise in available apartment units has contributed to flat or falling rents in some metros, prompting developers to pause new projects.
                                • For the tax year 2023, about 2.3 million tax returns utilized the Energy Efficient Home Improvement credit (25C tax credit) under the Inflation Reduction Act (IRA) of 2022, according to the Internal Revenue Service’s (IRS) most recent clean energy tax credit statistics. The 25C tax credits, which are based on 30% of the improvement’s cost, help homeowners pay for qualifying energy-efficiency improvements to their primary or secondary residences. The credits include a total annual credit of $1,200 for insulation and air-sealing home-improvement projects. The credits are available until 2032, and the combined annual maximum credit is capped at $3,200. In the 2023 tax year, insulation and air-sealing materials and systems were the most popular improvements, accounting for nearly 30% of all returns that claimed a 24C credit.
                                • The NAHB/Westlake Royal Remodeling Market Index (RMI) reading for the third quarter of 2024 was 63, down two points from the second quarter, according to an October 2024 report by the National Association of Home Builders (NAHB). Any RMI reading over 50 indicates that most remodelers feel market conditions are good. In the second quarter, the Current Conditions Index portion of the RMI declined one point to 72. The Future Indicators Index component of the RMI fell three points to 55. While the RMI remained solidly in positive territory in Q2 2024, the NAHB noted that high prices for labor and high interest rates continue to pose challenges for some remodelers. The NAHB expects remodeling spending to post solid 2% growth over the next two years.
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