NAHB data on home builder profit averages

Builders reported an average of $16.2 million in revenue for fiscal year 2014, of which $13.2 million (or 81.1% of revenue) was spent on cost of sales (i.e. land costs, direct and indirect construction costs), thus leaving them with a gross profit margin of 18.9% ($3.1 million).

National Association of Home Builders economics analyst Rose Quint offers a sneak preview of findings from the association's Cost of Doing Business series, based on a survey of home builders willing to share their operational data on a confidential basis.

When you factor for geography, company size, and many, many business metrics, the "averaging" of the data points may serve as, at best, directional yardsticks, rather than solid best-practice-based performance measures. Builders find value in the analysis as a "peer to peer" proxy on a number of areas of their business they manage to. Quint writes:

Profitability levels in 2014 are the highest reported in the Cost of Doing Business series since 2006. That year, the average gross profit margin for single-family builders was 20.8%; it then fell dramatically to 14.4% in 2008; and has been rising slowly but steadily since, up to 15.3% in 2010, 17.4% in 2012, and 18.9% in 2014.

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