Residential Building 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 200,000 residential building contractors in the US build single and multi-family homes (condos and townhouses) and provide remodeling services. The majority of new single-family homes are speculative homes, in which the contractor owns the land and begins construction without a sales contract. Contractors that build speculative homes are known as operative builders. About 78% of residential building contractors are solo operators.
Reliance On Credit Markets
The availability of credit affects potential buyers’ ability to secure a mortgage and contractors’ access to capital.
Reliance On Subcontractors
Residential building contractors rely on subcontractors for a high percentage of work.
Industry size & Structure
The average residential building contractor employs 4-5 workers and generates about $2 million in annual revenue.
- The residential building contractor industry consists of about 200,000 companies that employ about 927,000 workers and generate $342 billion annually.
- An additional 795,000 solo-practitioners generate $61 billion annually.
- Remodelers account for 63% of establishments; single-family general contractors are 29%; operative builders are 6%; and multi-family contractors are 2%.
- While residential construction includes private and public projects, the vast majority of work is in the private sector.
- About 80% of residential building contractors employ fewer than 5 workers and together cover 22% of the industry's payroll. About 20 establishments are very large, employing over 500 workers each and together covering 3% of industry payroll.
- Large companies include D.R. Horton, Pulte Homes, Lennar Corporation, NVR, and KB Home.
Industry Forecast
Residential Building Contractors Industry Growth
Recent Developments
Jan 17, 2025 - Residential Construction Loan Volumes Decline
- In the third quarter of 2024, the volume of outstanding residential acquisition, development, and construction (AD&C) loans made by FDIC-insured institutions declined for the third quarter in a row, according to the National Association of Home Builders (NAHB). The value of residential AD&C loans in Q3 2024 was $490.7 billion compared to $495.8 billion in Q2 2024. The volume of residential AD&C loans is expected to rise in 2025 as the Federal Reserve continues its monetary easing policies, but potential headwinds include the federal deficit and economic uncertainty.
- Home remodeling spending is expected to see slight gains in 2025 after two years of weakening expenditures, according to the Leading Indicator of Remodeling Activity (LIRA) report released in January by the Joint Center for Housing Studies at Harvard. Homeowner improvements and repairs are expected to increase 0.4% to $513 billion in the first quarter of 2025 compared to Q1 2024. In the second quarter of 2025, remodeling spending will rise quarter-over-quarter to $505 billion, up 0.7% from Q2 2024. Spending will then increase to $506 billion in Q3 2025, up 1.2% from Q3 2024. In the fourth quarter of 2025, year-over-year spending is forecast to rise 1.2% to $509 billion. Joint Center expects improvements will be supported by rising home values, a steady labor market, and gradually improving sales of existing homes. Better retail sales of building materials and solid remodeling permitting activity should also support home improvement spending.
- In the third week of January 2025, commodity prices for lumber – a key input for residential construction – were about $590 per thousand board feet – up about 11% from a month earlier, and about 8% higher than they were a year earlier, according to Trading Economics. Lumber prices may be moving higher amid improved mortgage applications and anticipated interest rate cuts by the Federal Reserve. The threat of increased tariffs on Canadian lumber imports may also be putting upward pressure on lumber prices. Production cuts and mill closures by some US lumber producers have increased dependence on Canadian lumber suppliers.
- In December 2024, Greystar Real Estate Partners – the largest apartment owner in the country – opened a six-building, 312-unit complex assembled using modular construction methods, according to The Wall Street Journal. The development – called “Ltd. Findlay” – near Pittsburgh is Greystar’s first modular apartment project, as the company hopes the alternative method can speed construction in an industry often mired by delays. The project was built at Greystar’s factory in Knox, Pennsylvania, and the firm has six other modular projects in the works. Modular housing is built in factories and assembled on-site, which proponents suggest reduces construction time and labor and materials costs. While modular housing remains a small part of the overall market, it is gaining ground amid a shrinking construction labor force and rising costs.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.