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 11,730 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 11,730 establishments that employ about 84,700 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 accounts for 20.5% 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 (18.4%).
                            Industry Forecast
                            Framing Contractors Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Jan 11, 2024 - Framing Employment Drops, Wages Rise
                            • Amid competition for skilled workers, framing wages have been rising in 2023. In late Q3 2023, framing contractor wages were up significantly compared to a year earlier, and employment was down by a similar amount. Falling employment amid rising wages may suggest contractors are having to sweeten compensation to attract enough workers, which could pressure margins. However, framers’ margins may be getting some relief as prices for some key inputs decline. In early Q4 2023, producer prices for softwood cut stock and dimensional lumber were sharply lower than they were a year earlier.
                            • New single-family home sales decreased 12.2% month-over-month and were up 1.4% year-over-year in November 2023, according to the US Department of Commerce. While high interest rates continue to weigh on new home sales, the expectation that interest rates have peaked and tight inventories of existing homes for sale may boost new home sales later in 2024, according to the National Association of Home Builders (NAHB). Lower home prices may also lure buyers; the median new home sales price in November was $434,700, down 6% from November 2022 but up 4.8% compared to October 2023.
                            • Pressures, including high interest rates and a shortage of new homes available to purchase, are prompting housing bulls on Wall Street to construct entire build-to-rent communities, according to The Wall Street Journal. In Q3 of 2023, large landlords that own between 100 and 1,000 homes purchased just 1% of homes sold in the US, compared to 3% for all of 2022, according to John Burns Research and Consulting. Once a model that worked well when foreclosure rates were higher, industry watchers suggest that finding and managing investment homes individually has become too time-consuming, costly, and inefficient. While the build-to-rent community market is still small – about 900 neighborhoods in the US, according to the Urban Institute – the National Association of Home Builders believes that soon 10% of new homes will be build-for-rent.
                            • The Market Composite Index, a measure of mortgage application activity, rose a seasonally adjusted 9.9% for the week ending January 5, 2024, according to the Mortgage Bankers Association (MBA). The seasonally adjusted Purchase Index increased by 6% over the same period. The average 30-year fixed-rate mortgage rose to 6.81%. MBA Vice President and Chief Economist Joel Kan said, “The increase in purchase and refinance applications for both conventional and government loans is promising to start the year but was likely due to some catch-up in activity after the holiday season and year-end rate declines. Mortgage rates and applications have been volatile in recent weeks and overall activity remains low.”
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