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 2018 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 2017 Builder Census can be found here and Associate Census here. At the end of 2018, there were 38,233 builder members representing 32 percent of the total NAHB membership. Associate members make up the remaining 68 percent of membership and were highlighted in a housingeconomics.com article last month that you can find here.
61% of Builder Members Build Single-Family Homes
Sixty-one percent of NAHB’s builder members are primarily single-family builders (spec/tract, custom, or general contracting), 22 percent are residential remodelers, 5 percent each are commercial builders and 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 did not change significantly from 2017 to 2018. The categories of single-family home builders, residential remodeling, commercial building, and land development shifted by just 1 percentage point during this time frame. Meanwhile, the categories of multifamily building and commercial remodeling remained unchanged, while that for manufacturing of modular/panelized/log homes shifted by less than a percentage point.
69% of Builders Have Fewer than 10 Employees
In 2018, builder members had a median of 5 employees on payroll. Thirteen percent had 1 employee, 32 percent had 2 to 4 employees, 24 percent had 5 to 9, 23 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 2018 has remained unchanged at 5 since 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 had the largest payrolls, with a median of 18 employees in 2018, followed by multifamily builders and commercial builders (a median of 10 employees each), commercial remodelers (8 employees), and residential remodelers (5 employees). Single-family builders had a median of 4 employees and land developers had a median of 3.
21% of Builders (Plurality) only Build 2 to 3 Units a Year
Ten percent of builders started only one unit, the plurality – 21 percent – started 2 or 3 units, 13 percent 4 or 5 units, 15 percent 6 to 10 units, 15 percent 11 to 25 units, 11 percent 26 to 99 units, 7 percent 100 to 499 units, and only 2 percent started 500 units or more. Six percent did not start any housing unit in 2018 (Exhibit 3). The median number of units started in 2018 was 6.
Since the start of the Census in 2008, the median number of units built by members has oscillated between 3 and 6. In 2008, builders reported starting a median of 4 units, before slipping to 3 units between 2009 and 2011. It then rose to 4 units in 2012, 5 units between 2013 and 2015, and 6 units in 2016, fell back to 5 units in 2017, and then inched up to 6 again in 2018.
The median number of units started is highest among multifamily builders (75 units started in 2018), followed by manufacturers of modular/panelized/log homes (50), single-family builders and land developers (a median of 6 each), commercial builders (3), commercial remodelers (2), and residential remodelers (1).
Median Dollar Volume is Flat in 2018
The median dollar volume of business among builder members was $2.7 million in 2018, unchanged from its 2017 level. Sixteen percent of builder members reported a 2018 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, 12 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 2018 at $15.0 million or more. One percent of builder members reported no business activity in 2018 (Exhibit 5).
The median dollar volume of business essentially plateaued between 2008 and 2011, with levels ranging from $0.9 to $1 million dollars, then rose sharply between 2012 ($1.1 million) and 2015 ($2.5 million). It fell slightly to $2.4 million in 2016, and increased in 2017 and 2018 to reach its highest level since the inception of the Census ($2.7 million) (Exhibit 6).
Levels of revenue also vary widely across categories of builder members. Multifamily builders had the highest median revenue in 2018 ($8.3 million), compared to $0.8 million among residential remodelers, $1.3 million among commercial remodelers, $3.0 million among land developers, $3.1 million among modular/panelized/log home manufacturers, and $3.2 million for both single-family builders and commercial builders.
Age, Race and Ethnicity
The median age of NAHB builder members in 2018 was 57 years. Fifty-six percent of builder members are 55 or older. Of the remaining, 24 percent are 45 to 54 years of age and approximately 20 percent are younger than 45 (Exhibit 7).
The median age of builder members has been rising since the Census first started in 2008. That year, the median age was 52. It rose to 53 in 2009 and 2010, to 54 in 2011, to 56 from 2012 to 2016, and inched up to 57 in 2017 and 2018 (Exhibit 8).
The vast majority of NAHB’s builder members are white. In fact, 97 percent of builder members identified themselves as White, alone; while less than 0.5 percent identified themselves as Black or African-American, alone; American Indian or Alaska Native, alone; Asian, alone; or Pacific Islander, alone. One percent identified themselves as having two or more races and another 1 percent identified themselves as belonging to some other race. In terms of ethnicity, only two percent report being of Hispanic, Latino, or Spanish origin (Exhibits 9 and 10).
53% of 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 2018, only 1 percent reported that they did not finish high school, 14 percent completed high school, 7 percent have had career technical training, and 24 percent have had some college education. The remaining 53 percent have an undergraduate or graduate degree (Exhibit 11).
The share of builder members with a higher education degree (either undergraduate or graduate) differs across builder categories. For example, 83 percent of members in land development have a degree, compared to 34 percent of commercial remodelers.
65% Have Been Members for a Decade or More
The median NAHB membership tenure among builders is 15 years, with 65 percent of builder members having more than a decade of membership. Twelve percent have been members 5 to 9 years, and 22 percent have been members for 4 years or less (Exhibit 12).
The Builder Census in 2018 marks the first year since 2013 in which the share of builders who have been members for four years or less has increased. From 2013 to 2017, the share of builder members with a tenure of 4 years or less held steady at 20 percent, but increased slightly to 22 percent in 2018 (Exhibit 13). It is important to note, however, that this share is still significantly lower than the share in 2008 (42 percent).
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.
For more information about this item, please contact Carmel Ford at 800-368-5242 x8503 or via email at firstname.lastname@example.org.