The home building industry is dominated by small, local companies. The firms typically do not have many direct employees but ultimately are responsible for a large payroll in the community through subcontractors, suppliers, and professional services. As the industry begins its return to normal, these local and national impacts will grow.
The typical NAHB single-family home building firm constructed 27 homes in 2013, according to the NAHB’s 2013 annual census of its members. Fewer than 200 firms (1 percent) built more than 500 units, and fewer than two dozen builders produced more than 1,000 units a year. The largest builder accounted for less than 5 percent of all single-family starts in 2013. Multifamily builders tend to be larger and more concentrated. The typical multifamily builder produced 137 units in 2013, and about 225 firms (12 percent) produced more than 500 units. Performance was better than in 2009, when the typical single-family builder constructed 17 homes and the typical multifamily builder produced 83 units.
Employee and Revenue Growth
Employees and revenues also reflect growth and larger impact compared with the depths of the housing depression. The typical single-family firm employed 5.7 construction workers and 4.3 non-construction workers for a total of 10 employees. The typical multifamily firm employed 29.2 workers, and the typical remodeler had 7.7 employees. Given the total NAHB membership, these three core industry components directly employed more than 300,000 people in 2013. The rest of the builder membership categories employed 72,000. Because the industry kept employees working long after the collapse, employment by builder members is 30 percent lower now than in 2009.
Overall employment in the home building industry has increased slightly from the January 2011 bottom when total construction and subcontracting employment sunk to 1.98 million off the peak in April 2006. Since then, employment has grown to 2.26 million above the bottom, but that does not account for all the additional workers in fields other than construction that owe their employment to home building. NAHB estimates a near equal number of manufacturer, supplier, and professional jobs are linked directly to home building.
Gross revenues have increased as building activity increases, and builders are able to do more with less. The typical single-family firm grossed $2.4 million in 2013, up 77 percent from 2009; multifamily firms had an average gross of $4.8 million, up 45 percent from 2009. Remodelers’ average gross grew to $907,000 from $507,000—nearly 80 percent over the four year period. (Consistent data collection for these comparisons began in 2008, so there is no comparable data from the boom period to gauge the change from peak output.)
The census shows characteristics of individuals in the business have not changed significantly over the cycle. The median age of a single-family home builder is 54, up one year from 2009; the median age of multifamily builders and remodelers is 56, up from 53 in 2009. The small change implies few younger individuals have entered the industry, which remains dominated by males: 94 percent of single-family builders, 90 percent of multifamily builders, and 93 percent of remodelers are male. However, multifamily builders did see a slight increase in female leadership from 4 percent in 2009 to 10 percent in 2013.
NAHB census results show builders are more educated than the general population: more than half have a bachelor’s degree or more compared with 29 percent of the general population. Only 15 percent have not gone beyond a high school degree or less, compared with 42 percent of the population.
The extensive influence of the home building industry on the economy will continue as the industry meets a rising demographic demand and answers the pent-up demand for new homes from existing homeowners.