Flooring Contractors

Industry Profile Report

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

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

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

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

Industry Profile Excerpts

Industry Overview

The 16,400 flooring contractors in the US install resilient floor tile, carpeting, linoleum, and hardwood flooring. Single-family homes and office buildings account for the majority of sales. Other sources of revenue include apartment buildings; health care and institutional buildings; retail establishments; and educational buildings.

Dependence on General Contractors

Flooring contractors often work with general contractors (GC), which act as a gateway to construction jobs, especially large projects.

Vulnerability to Trends in the Construction Market

The flooring industry and demand for installation services are vulnerable to trends in the construction market, which is cyclical and influenced by economic factors.

Industry size & Structure

The average flooring contractor operates out of a single location, employs about 4-5 workers, and generates $1 million annually.

    • The flooring contracting industry consists of about 16,400 establishments that employ about 78,400 workers and generate $18 billion annually.
    • Most firms are small, independent businesses that served a limited geographical area. The largest firms, such as Redi Carpet, Bonitz Flooring Group, and Spectra Contract Flooring, operate regionally.
    • Large flooring retailers include LL Flooring, Empire Today, and Floor & Décor. Retailers typically refer customers to third-party flooring installers.
                                  Industry Forecast
                                  Flooring Contractors Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  May 11, 2022 - Remodeling Activity to Moderate by Q3
                                  • Rapidly rising home prices have increased homeowner equity which is expected to boost residential remodeling spending through 2022, according to the Leading Indicator of Remodeling Activity (LIRA) report released in April 2022 by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 15.8% year over year to $406 billion in the second quarter of 2022. On a year-over-year basis, Q3 remodeling spending levels are forecast to rise 19.7%, then drop slightly to 17% growth in Q4. Year-over-year growth will slip further in Q1 2023 to 15.1%. Home improvement spending is projected to taper off beginning in the third quarter of 2022 amid rising financing, materials, and labor costs and concerns about a possible economic slowdown.
                                  • The number of building permits issued for privately-owned housing units increased 0.4% month over month and rose 6.7% year over year in March 2022. Housing starts increased 0.3% month over month and 3.9% year over year in March. Housing completions decreased 4.5% month over month and fell 13% year over year in March.
                                  • Total construction spending increased 0.1% in value month over month on an adjusted basis and 11.8% in value year over year on an unadjusted basis in March 2022, according to the US Census Bureau. Residential construction spending increased 1% month over month and 17.8% year over year in March. Nonresidential construction spending declined 0.8% month over month and increased 5.8% year over year in March.
                                  • The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, decreased by 1.2% to 103.7 in March 2022 compared to the prior month, marking the fifth consecutive month of declines, according to the National Association of Realtors (NAR). An index of 100 is equal to the level of contract activity in 2001. Rising mortgage rates and higher home prices are having a cooling effect on the US housing market. "As it stands, the sudden large gains in mortgage rates have reduced the pool of eligible homebuyers, and that has consequently lowered buying activity,” said Lawrence Yun, NAR's chief economist. Rising home prices can eat into homebuyers’ budgets for pre-move improvements, such as flooring renovations.
                                  • Homebuilder sentiment, as measured by the National Association of Home Builders/Wells Fargo Housing Market Index, decreased to 77 in April 2022 from 79 in March, marking the fourth consecutive monthly decline. Higher materials costs and rapidly rising interest rates are making housing less affordable, which is weighing on builder confidence. Builders report that sales traffic and current sales conditions are at their lowest levels since summer 2021. Higher mortgage rates and supply chain disruptions have unsettled the US housing market, especially for potential first-time homebuyers.
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