Remodelers’ Profits Remain Flat
The industry-average net profit margin for remodelers was 5.2% in 2018, essentially unchanged from the 5.3% reported in 2015, according to the latest Remodelers’ Cost of Doing Business Study. The report includes a nationwide survey of residential remodeling companies designed to produce profitability benchmarks for that segment of the construction industry. The 2020 edition collected information for fiscal year 2018 and compares findings to fiscal years 2011 and 2015.
The study shows that while gross profit margins increased slightly, net margins have been flat. On average, remodelers reported $2.3 million in revenue for fiscal year 2018, of which $1.6 million (69.9%) was spent on cost of sales (e.g., labor, material and trade contractor costs) and another $563,000 (24.8%) on operating expenses (e.g., general and administrative, finance, and sales and marketing expenses, and owner’s compensation). As a result, the industry average gross profit margin for 2018 was 30.1%, with a net margin of 5.2%.
The figure below puts these margins in historical context. It shows that remodelers have been able to effectively reduce their cost of sales (as a percent of revenue) in recent years, allowing them to increase their gross profit margin up from 26.8% in 2011, to 28.9% in 2015, and then to 30.1% in 2018. Higher operating expenses swallowed up higher gross margins in 2018, however, and remodelers averaged a net profit margin of 5.2%, essentially the same as in 2015 (5.3%), but significantly better than in 2011 (3.0%).
Rose Quint, NAHB’s assistant vice president for survey research, provides more details in this Eye on Housing blog post.
Latest from NAHBNow
Jun 16, 2025
Permit Activity Declines for Fourth Consecutive MonthHousing permits continued a downhill trend for the fourth month in a row, pointing to a broader residential construction slowdown for 2025. Single-family permits were down in three out of four regions, while multifamily permits were up in three out of four regions. See the 10 largest markets for single-family and multifamily activity.
Jun 13, 2025
Podcast: Addressing the Labor Shortage through Advocacy and Key CollaborationsOn the latest episode of NAHB’s podcast, Housing Developments, CEO Jim Tobin and COO Paul Lopez are joined by SkillsUSA Executive Director Chelle Travis to discuss a new collaboration with NAHB’s Professional Women in Building (PWB) Council to bridge the workforce gap in construction.
Latest Economic News
Jun 13, 2025
Household Real Estate Asset Value Falls to Start the YearThe market value of household real estate assets fell from $48.1 trillion to $47.9 trillion in the first quarter of 2025, according to the most recent release of U.S. Federal Reserve Z.1 Financial Accounts. The value of household real estate assets declined for three consecutive quarters after peaking at $48.8 trillion in the second quarter of 2024 but remains 2.1% higher over the year.
Jun 12, 2025
Producer Prices Rise in May: New Construction Input AnalysisPrices for inputs to new residential construction—excluding capital investment, labor, and imports—rose 0.2% in May, following a (revised) decrease of 0.2% in April. These figures are taken from the most recent Producer Price Index (PPI) report published by U.S. Bureau of Labor Statistics.
Jun 11, 2025
Inflation Up Slightly in MayDespite inflationary pressure from tariffs, inflation in May rose slightly but came in softer than expected. The Consumer Price Index increased from 2.3% in April to 2.4% in May year-over-year, according to the Bureau of Labor Statistics’ report.