The home building industry includes more than just home builders. In fact, only a fraction of the industry’s total employment impact comes from employees of home builders. In July, I reviewed the characteristics of home builders, so this article looks at the varied industries that support, supply, and service home building.
Roughly two-thirds of NAHB members are classified as associates, which come primarily from allied industries. The largest single associate classification is subcontractors or specialty trade contractors, which make up 39 percent of the associates and a little more than a quarter of the entire membership. To put that in perspective, all types of single-family builders represent 15 percent of all members.
Of course, even within the broader category of subcontractor, there are abundant specialties, including plumbing, heating, air conditioning (7 percent of associates); carpentry (3 percent); electrical (3 percent); masonry, stone work, tile setting, and plastering (3 percent); roofing, siding, and sheet metal work (3 percent); and eight additional specific specialties as well as an “other” category. The other category includes specific services such as closet systems and garage door openers.
Subcontractor companies are larger than home building companies in terms of the number of employees, but smaller in regards to receipts. NAHB builder companies employ an average of 11 workers for a total of 440,000, while the average subcontractor member employs 30 workers for a total of 980,000. Builder members had median individual 2013 gross revenue of $965,000; subcontractors grossed a median $826,000. The home builders gross is based on the sale of the entire home while individual subcontractors’ receipts reflect just one part of the home.
The second largest contributor to home building employment within the associate members is professional specialist, at 13 percent of associates and nearly 9 percent of all members. These professions include engineers (3 percent of associates); planners and designers (3 percent); architects (2 percent); marketing, advertising, and public relations (2 percent); and four others (3 percent). The average professional firm employs 56 workers for a total of 588,000 employees. Median 2013 gross receipts were slightly less than $800,000.
Retailers and distributors make up 11 percent of the associate members and include building material and lumber yards (4 percent of associates); floor covering businesses (2 percent); and appliance retailers (1 percent). Collectively, this category employs 670,000 with a median 2013 gross of $3.9 million.
Financial service companies employ the most of any identified associate category with 1.4 million workers and have the largest median annual gross at $8.8 million. Manufacturing companies also represent a small share of associate members but typically are large firms. These members’ products and services do serve economic sectors beyond home building but they’re so closely tied to our sector that belonging to local home building associations is an important business relationship.
Associate members employed 5.7 million workers in 2013, up from 4.5 million in 2012, or 26 percent growth. The substantial growth is a result of individual firm expansion rather than an expansion in the number of firms. In fact, the growth in all associates’ firms employment accounts for nearly half of total employment growth in the U.S.
Growth in the support industries is in contrast to very slow growth in home building employment. Government employment numbers report direct home builder employment rose by only 33,000 from 2012 to 2013. Associate company growth, however, is not traceable with government reports because the companies that support home building are counted in other industries such as services and manufacturing.
Collectively, the home building industry is an important component of the U.S. economy and has and will continue to contribute to growth as the recovery continues.