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.
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.
Variable Material and Labor Costs
The cost of construction materials and labor can vary significantly and affect profitability for new home builders.
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
Jul 18, 2024 - Home Builder Confidence Wanes
- Home builder confidence in the single-family market dropped in July to the lowest level since December 2023 amid high mortgage rates and elevated builder financing costs, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell one point to 42 in July 2024. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The HMI survey also showed that 31% of builders have reduced home prices to lure potential buyers off the sidelines, although the average price reduction of 6% remained unchanged for the thirteenth consecutive month.
- Some young workers in the skilled trades are finding a wide following for their social media posts that chronicle their day-to-day activities on the job site, according to The Wall Street Journal. Interest in the skilled trades among Gen Z is growing as many younger workers look for employment that doesn’t involve taking on large amounts of debt and offers competitive wages. In 2023, enrollment in vocation-focused community colleges increased by 16%, marking the highest level since the National Student Clearinghouse began tracking the metric. For many younger job seekers, skilled tradespeople posting about their work on social media sites is their first exposure to the trades, and construction insiders report that such posts can help in recruitment.
- A trend in smaller lot sizes for single-family detached homes has accelerated in recent years, according to the latest Survey of Construction by the US Census Bureau. Even as more families decamped to suburban areas seeking more space during the pandemic, lot sizes have continued to shrink. In 2023, lot sizes of less than 0.16 acres (less than 7,000 square feet) accounted for 40% of new single-family home sales compared to 30% in 2011. The share of lots under 0.16 acres has risen two percentage points since the pandemic began. Shrinking lot sizes suggest that firms that build homes speculatively have reduced lot and home sizes to cope with lot shortages and to offer more affordable homes as housing costs have risen.
- A weak US housing market has pushed lumber prices down. High interest rates and home prices have reduced key housing indicators, including housing starts and building permits. Sluggish lumber demand from home builders has increased supplies and driven prices lower. As of late June, lumber futures declined more than 25% since mid-March, according to The Wall Street Journal.
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