Framing 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 11,500 framing contractors in the US erect the structural framing and sheathing in buildings, using primarily wood. Single family homes account for 49% of industry sales. Other types of projects include apartment buildings and commercial buildings (stores, restaurants, gas stations, parking garages).

Vulnerability to Trends in the Housing Market

The framing contracting industry is primarily dependent on upstream demand from the residential construction industry, which is cyclical and sensitive to economic conditions.

Dependence on Skilled Labor

Framing contractors rely on a skilled labor force willing to perform physically demanding work in all types of weather conditions.

Industry size & Structure

The average framing contractor operates out of a single location, employs 7 workers, and generates about $1.4 million annually.

    • The framing contracting industry consists of about 11,500 establishments that employ about 83,800 workers and generate about $16.6 billion annually.
    • The industry is fragmented. Most firms are small, independent operators; over 70% of firms generate less than $500,000 annually.
    • The framing stage accounted for 17-19% of construction costs, the second highest cost category, after interior finishes, according to the National Association of Home Builders (NAHB). Of the detailed items in new home construction, framing and trusses accounted for the largest share of costs (15-17%).
                            Industry Forecast
                            Framing Contractors Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Nov 11, 2022 - US Home Sales Drop
                            • New single-family home sales decreased 10.9% month over month and declined 17.6% year over year in September 2022, according to the US Department of Commerce. On a year-to-date basis, new home sales were down 14.3% in the first nine months of 2022 compared to the same period in 2021. According to Freddie Mac, on November 3, 2022, the US weekly average rate on a 30-year fixed mortgage was 6.95%. A year ago, the rate was just over 3%. Industry watchers expect new home sales to remain weak as the Fed uses interest rate hikes to bring down inflation.
                            • US housing affordability fell to its lowest point since the Great Recession in the third quarter of 2022 amid rising mortgage rates, inflation, low housing inventory, and high home prices, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI). Only 42.2% of new and existing homes sold between July 2022 and the end of September were affordable for households with a median income of $90,000. The third quarter of 2022 marked the second consecutive quarterly record low for housing affordability in more than 10 years. According to the HOI, the median home price in Q3 2022 was $380,000, down from the all-time high of $390,000 set in Q2 2022.
                            • Homebuilders are in a better position to weather a downturn than they were during the housing meltdown of 2007 and 2008, according to The Wall Street Journal. Between 2007 and 2012, the number of US homebuilders dropped by half, according to the National Association of Home Builders (NAHB). Those that survived learned valuable lessons, including a more conservative approach to taking on debt and owning less land. Still, inventories are rising as demand wanes, prompting some builders to cut prices. Some builders are also renting out homes instead of selling them or selling them in bulk to investors.
                            • The number of building permits issued for privately-owned housing units increased 1.4% month over month but declined 3.2 year over year in September 2022. Housing starts fell 8.1% month over month and decreased 7.7% year over year in September. Housing completions fell 8.1% month over month and dropped 7.7% year over year in August.
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