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
Jan 13, 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.
- In the second week of January 2025, commodity prices for lumber – a key input for single-family home builders – were about $557 per thousand board feet - essentially unchanged from a month earlier, according to Trading Economics. Lumber prices were also flat on a year-over-year basis. Over the last year, commodity prices for lumber have seen some volatility as they rose as high as $606 in March or fell as low as $438 in July. A sluggish housing market and global economic uncertainty have kept lumber prices in check. These factors are expected to maintain downward pressure on lumber pricing despite potential tariffs and trade strife.
- According to some industry insiders’ estimates, the 2024 housing market may have been the slowest in nearly 30 years as high mortgage rates and home prices combined with extremely low housing inventories have kept homeowners locked in place and would-be homebuyers priced out of the market, according to The New York Times. The National Association of Realtors estimates that four million homes were sold in 2024, marking the second straight year of historically weak activity, and the slowest home sales since 1995. Market observers note that the housing crisis is a product of weak supply. Builders have struggled amid lingering pandemic-era problems, including high borrowing, labor, and materials costs. Freddie Mac estimates the housing shortage equals about 3.7 million homes. The outlook for 2025 remains uncertain as home prices and mortgage rates are expected to remain stubbornly high.
- Some building contractors are concerned that the Trump administration's promises of tariffs and a tougher stance on immigration could increase their costs and make their labor difficulties worse, according to The Wall Street Journal. Some industry observers suggest Trump’s plan to deport undocumented workers could cause labor shortages. In California, New Jersey, Texas, and Washington, DC, immigrants make up more than half of the construction workforce, according to the Harvard Joint Center for Housing Studies. Nationwide, undocumented workers make up about 13% of the construction sector’s workforce, according to the Pew Research Center. President-elect Trump’s proposed 25% tariffs on goods from Canada and Mexico could drive up construction costs for key inputs, including softwood lumber, cement, gypsum (used to make drywall), and iron and steel. However, some builders are optimistic that Trump’s deregulation plans could reduce construction costs.
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