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 2017 annual member 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 2016 Builder Census can be found here and Associate Census here. At the end of 2017, there were 37,190 builder members representing 32 percent of the total NAHB membership. Associate members make up the remaining 68 percent and will be highlighted in a future article.
62% of Builder Members Build Single-Family Homes
Sixty-two percent of NAHB’s builder members are primarily single-family builders (spec/tract, custom, or general contracting), 21 percent are residential remodelers, 6 percent are commercial builders, 5 percent each are multifamily builders and land developers, and one percent are commercial remodelers. Less than 0.5 percent of builder members are manufacturers of modular/panelized/log homes (Exhibit 1).
The composition of NAHB’s builder membership changed slightly from 2016 to 2017. The share of builder members primarily involved in single-family home building rose from 60 percent to 62 percent, and the share who identify as land developers went from 4 to 5 percent during this period. At the same time, the share who are residential remodelers dipped from 23 percent to 21 percent.
70% of Builders Have Fewer than 10 Employees
In 2017, builder members had a median of 5 employees on payroll. Thirteen percent had 1 employee, 33 percent had 2 to 4 employees, 24 percent had 5 to 9, 22 percent had 10 to 49, and 5 percent had 50 or more paid employees. Three percent had no employees on payroll (Exhibit 2). The median number of employees in 2017 (5) was unchanged from 2015 and 2016. 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 had the largest payrolls, with a median of 18 employees in 2017, followed by multifamily builders and commercial builders (a median of 12 employees each), and commercial remodelers (8 employees). In contrast, companies within the following primary activities had a median of only 4 employees on payroll: single-family builders, residential remodelers, and land developers.
22% of Builders (Plurality) only Build 2 to 3 Units a Year
Ten percent of builders started only one unit, the plurality – 22 percent – started 2 or 3 units, 14 percent 4 or 5 units, 16 percent 6 to 10 units, 14 percent 11 to 25 units, 11 percent 26 to 99 units, 6 percent 100 to 499 units, and only 2 percent started 500 units or more. About 4 percent did not start any housing unit in 2017 (Exhibit 3). The median number of units started in 2017 was 5.
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. The median number of units started returned to 5 in 2017.
As expected, the median number of starts varies significantly across different groups of builder members. Single-family builders, for example, started a median of 5 units in 2017, while multifamily builders started a median of 66 units.
Median Dollar Volume Rises in 2017
The median dollar volume of business among builder members was $2.7 million in 2017, about 13 percent higher than in 2016 ($2.4 million). The median that builder members reported in 2017 marks the highest point in the census’ 10-year series on builder revenue. Sixteen percent of builder members reported a 2017 dollar volume of less than $500,000, 17 percent between $500,000 and $999,999, 40 percent between $1.0 million and $4.9 million, 13 percent between $5.0 million and $9.9 million, 4 percent between $10.0 million and $14.9 million, and 10 percent reported their dollar volume in 2017 at $15.0 million or more. One percent of builder members reported no business activity in 2017 (Exhibit 5 & 6).
Levels of revenue also vary widely across categories of builder members. Multifamily builders had the highest median revenue in 2017 ($7.3 million), compared to $0.8 million among residential remodelers, $1.6 million for commercial remodelers, $3.2 million for single-family builders, $3.6 million for modular/panelized/log home manufacturers, $3.7 million for land developers, and $4.2 million for commercial builders.
Age, Race and Ethnicity
The median age of NAHB builder members in 2017 was 57 years. Fifty-seven percent of builder members are 55 or older. Of the remaining, 24 percent are 45 to 54 years of age and approximately 19 percent are younger than 45 (Exhibit 7).
The vast majority (97 percent) of NAHB’s builder members are White, alone. Less than 0.5 percent identified themselves as Black or African-American, alone; American Indian or Alaska Native, alone; Asian, alone; or as two or more races. One percent identified themselves as part of some other race. In terms of ethnicity, only two percent report being of Hispanic/Latino/Spanish origin (Exhibits 8 and 9)./p>
57% Builder Members Have a Higher Education Degree
The share of NAHB builder members with a college or advanced degree has remained above 50 percent every year since 2008. In 2017, only 1 percent reported that they did not finish high school, 13 percent completed high school, 6 percent have had career technical training, and 23 percent have had some college education. The remaining 57 percent have an undergraduate 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, 77 percent of members in land development have a degree, compared to 43 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 69 percent of builder members having more than a decade of membership. Eleven 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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