Every year since 2008, the National Association of Home Builders (NAHB) has conducted an annual census that collects company and demographic data from its members. It subsequently publishes these results here in HousingEconomics.com.
This article updates previous studies with results from the 2016 annual census on the characteristics of NAHB’s builder members. Builder members are defined as those whose primary business is single-family home building, multifamily building, residential or commercial remodeling, commercial building, land development, or manufacturing of modular/panelized/log homes. Associate members are involved in a wide range of support industries and professions including, among others, trade contractors, manufacturers, retailers/distributors, designers, and architects. Findings from the 2015 Builder Census can be found here and Associate Census here. At the end of 2016, 38,935 builder members represented 32 percent of the total NAHB membership. Associate members make up the remaining 68 percent and will be highlighted in a future article.
60% of Builder Members Build Single-Family Homes
Sixty percent of NAHB’s builder members are primarily single-family builders (spec/tract, custom, or general contracting), 23 percent are residential remodelers, 6 percent are commercial builders, 5 percent are multifamily builders, and 4 percent are land developers. One percent each are commercial remodelers and manufacturers of modular/panelized/log homes (Exhibit 1).
The composition of NAHB’s builder membership changed slightly between 2015 and 2016. The share of builder members primarily involved in single-family home building, for example, decreased from 64 percent to 60 percent during this period, while the share who are residential remodelers increased from 19 percent to 23 percent.
45% of Builders Have Between 1 and 4 Employees
In 2016, builder members had a median of 5 employees on payroll. Fourteen percent had 1 employee, 31 percent had 2 to 4 employees, 24 percent had 5 to 9, another 24 percent had 10 to 49, and 4 percent had 50 or more paid employees. Three percent had no employees on payroll (Exhibit 2). The median number of employees remained unchanged at 5 from 2015. From 2008 to 2014, the median number of employees on payroll was 4.
The median number of employees on payroll varies significantly by the company’s primary activity. Manufacturers of modular/panelized/log homes, for example, had the largest payrolls, with a median of 23 employees in 2016, followed by commercial builders (12 employees), multifamily builders (11 employees), and commercial remodelers (5 employees). In contrast, among single-family builders, residential remodelers, and land developers, the median number of employees was 4.
60% of Builders Started Between 1 and 10 Units
Six percent of builder members did not start any units in 2016, while 60 percent started between 1 and 10 units, 14 percent started 11 to 25 units, 12 percent 26 to 99 units, and 8 percent 100 or more units (Exhibit 3). The median number of units started in 2016 was 6.
The first year the member Census was conducted, 2008, builders reported starting a median of 4 units. The median then slipped to 3 units between 2009 and 2011, but gradually increased thereafter. It rose to 4 units in 2012, to 5 units between 2013 and 2015, and to 6 units in 2016 (Exhibit 4).
As expected, the median number of starts varies significantly across different groups of builder members. Single-family builders, for example, started a median of 6 units in 2016, while multifamily builders started a median of 42.
Median Dollar Volume Dips Slightly in 2016
The median dollar volume of builder members in 2016 was $2.4 million, barely under the median dollar volume reported in 2015 ($2.5 million). Nineteen percent of builder members reported a 2016 dollar volume of less than $500,000, 17 percent between $500,000 and $999,999, 39 percent between $1.0 million and $4.9 million, 11 percent between $5.0 million and $9.9 million, 5 percent between $10.0 million and $14.9 million, and 9 percent reported their dollar volume in 2016 at $15.0 million or more. One percent of builder members reported no business activity in 2016 (Exhibit 5 & 6).
Levels of revenue also vary widely across categories of builder members. Multifamily builders had the highest median revenue in 2016 ($5.3 million), followed by manufacturers of modular/panelized log homes ($5.0 million), commercial builders ($4.0 million), land developers ($3.2 million), single-family builders ($3.0 million), commercial remodelers ($1.2 million), and residential remodelers ($0.8 million).
Age, Race and Ethnicity
The median age of NAHB builder members in 2016 was 56 years. Fifty-five percent of builder members are 55 or older. Of the remaining, 26 percent are 45 to 54 years of age and 20 percent are younger than 45 (Exhibit 7).
The vast majority (96 percent) of NAHB’s builder members are White (alone). One percent or less identify themselves as Black/African-American, American Indian/Alaska Native, Asian, or Pacific Islander. In terms of ethnicity, only three percent report being of Hispanic/Latino/Spanish origin (Exhibits 8 and 9).
Over Half of Builder Members Have a Degree
The share of NAHB builder members with a college or advanced degree has remained above 50 percent every year since 2008. In 2016, 2 percent reported that they did not finish high school, 14 percent completed high school, 7 percent have career technical training, and 24 percent have had some college education. The remaining 53 percent have a college or graduate degree (Exhibit 10).
The share of builder members with a higher education degree (either undergraduate or graduate) differs across builder categories. For example, seventy-seven percent of multifamily builders have a degree, compared to forty-one percent of commercial remodelers.
More Than Two-Thirds Have Been Members for a Decade or More
The median NAHB membership tenure among builders is 15 years, with 68 percent of builder members having more than a decade of membership. Thirteen percent have been members 5 to 9 years, and 20 percent have been members for 4 years or less (Exhibit 11).
A profile for each category of builder member is available in the “Additional Resources” box at the top of this article.
This article will use median values, as averages can be inflated by a few high production builders. Medians are largely unaffected by these outliers because it calculates the middle most value, not taking into account how high the highest values are. An increase in a median’s value indicates an overall shift of all the builders, not a change in a few large builders.
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