Single-Family Home Builders
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 58,000 single-family home construction service providers in the US oversee the entire construction of new single-family detached houses, townhouses, and row houses. The industry includes general contractors and design-build firms. Firms do not own the land they are building upon.
Variable Material and Labor Costs
The cost of construction materials and labor can vary significantly and affect profitability for new home builders.
Dependence on Subcontractors
New home construction is highly dependent on subcontractors, with most firms directly employing a limited number of workers to oversee subcontracting activity.
Industry size & Structure
The average single-family home construction services provider operates out of a single location, employs 6-7 workers, and generates between $1 million and $2 million annually.
- The single-family home construction services industry consists of about 58,000 firms that employ over 381,000 workers and generate almost $70 billion annually.
- The industry is highly fragmented; the top 50 companies account for just over 15% of industry revenue. Most firms serve a limited geographical area.
- About half of firms generate less than $1 million annually and 40.9% generate less than $500,000 annually.
Industry Forecast
Single-Family Home Builders Industry Growth
Recent Developments
Nov 14, 2024 - Residential Construction Wages Spike
- The wages of residential building workers posted a year-over-year increase of 9.9% in September after jumping 10.8% in August, according to analysis of Bureau of Labor Statistics data by the National Association of Home Builders (NAHB). Wages in residential construction have been rising even as the number of job openings in the construction sector has fallen. There were 288,000 construction sector job openings in September compared to 328,000 in August. Wages in the residential building construction industry have been rising amid overall wage growth and a shortage of skilled labor in the construction market.
- Amid high interest rates, home builders have lured buyers with mortgage rate buydowns, but as interest rates begin to move lower, buydown strategies could stop penciling out, and builders may have to shift strategies, according to The Wall Street Journal. In mortgage rate buydowns, builders take on a portion of the interest rate costs – for all or a portion of the mortgage’s term – which gives the homebuyer a lower rate. However, buydowns have begun to eat into builders’ profits. The buydown strategy worked for builders as existing homeowners who felt locked in by their low mortgage rates kept their homes off the market, thereby reducing competition. However, as interest rates begin to move lower, more homeowners will decide to sell, introducing more price competition to the market. Industry observers suggest that builders may need to table their buydowns and pivot to other strategies to compete with existing homes, such as reducing home prices.
- Older Americans’ preference for aging in place is expected to tighten the US housing market over the next decade, according to a recent report by the Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA). The homeownership rate among Americans over 70 has been rising since 2015; this, combined with the size of the Baby Boom generation, is leading to larger numbers of existing homes staying off the market. The report does not expect an excess supply of existing homes to come to market over the next decade due to older Americans moving or dying. Aging homeowners staying in their homes longer could boost demand for new homes if the existing home market remains tight.
- The recent What Home Buyers Really Want Study by the National Association of Home Builders highlights some home technology features that are most attractive to prospective home buyers. Study participants were given a list of 19 technology features and were asked to rate each as essential, desirable, indifferent, or do not want. Some of the top tech features included programmable thermostats (78% of buyers ranking desirable or essential), security cameras (76%), video doorbells (74%), wireless home security system (70%), multi-zone HVAC systems (68%), lighting control system (63%), energy management system/display (61%), and wired home security system (61%).
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