Special Studies, May 1, 2015
By Heather Taylor
Economics and Housing Policy
National Association of Home Builders
Report available to the public as a courtesy of HousingEconomics.com
Every year since 2008, the National Association of Home Builders (NAHB) conducts 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 2014 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 include a wide range of supportive industries and professions including, among others, trade contractors, manufacturers, retailers/distributors, designers, and architects. Findings from the 2013 Builder Census can be found here and Associate Census here. At the end of 2014, 39,773 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.
More Than 60 Percent 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), 22 percent are residential remodelers, 5 percent land developers, 4 percent commercial builders, another 4 percent multifamily builders (rental units, condo, or general contracting), 2 percent commercial remodelers, and one percent manufacturers of modular/panelized/log homes (Exhibit 1).
The composition of NAHB’s builder membership changed only slightly between 2013 and 2014. The two most notable changes come from the shares of single-family custom home builders and residential remodelers. The share of builder members primarily involved with single-family custom home building rose seven percentage points from 27 percent in 2013 to 34 percent in 2014. On the other hand, the share of builder members who are primarily residential remodelers has dropped by 2 percentage points each year for the past three years, from 28 percent in 2011 to 22 percent in 2014.
Half of Builders Have Between 1 and 4 Employees
In 2014, builder members had a median of 4 employees on payroll, 3 construction employees and 1 non-construction employee. Fifteen percent had 1 employee, 35 percent 2 to 4 employees, 23 percent had 5 to 9, 20 percent had 10 to 49, and 5 percent had 50 or more paid employees. Three percent had no payroll at all (Exhibit 2). The median number of employees has been 4 since the membership census launched in 2008.
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 12 employees in 2014, followed by multifamily builders, with a median of 10 employees, and commercial builders with a median of 8 employees. In contrast, among commercial remodelers, the median number of employees was 5; among residential remodelers and single-family builders, the median was 4; and among land developers the median number of employees was 4.
Most Builders Started Between 1 and 10 Units
Six percent of builder members did not start any units in 2014, while 61 percent of builder members started between 1 and 10 units, 15 percent started 11 to 25 units, 11 percent 26 to 99 units, and 7 percent 100 or more units (Exhibit 3).
The median number of units started in 2014 was 5, unchanged from the 5 started in 2013, but higher than the 4 units started in 2012 or the 3 started in 2011 (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 5 units in 2014, while multifamily builders started a median of 60.
Median Dollar Volume Doubled Over Past Two Years
The median dollar volume of builder members in 2014 was $2,195,605. The 2014 median is about twice as high as 2012’s median ($1,063,324) and the highest it has been since the membership census was launched in 2008. Twenty percent of builder members reported a 2014 dollar volume of less than $500,000, 18 percent reported between $500,000 and $999,999, 38 percent between $1.0 million and $4.9 million, 10 percent between $5.0 million and $9.9 million, 4 percent between $10.0 million and $14.9 million, and 8 percent reported their dollar volume in 2014 at $15.0 million or more. One percent of builder members reported no construction activity in 2014 (Exhibit 5 & 6).
Levels of revenue also vary widely across categories of builder members. Multifamily builders had the highest median revenue in 2014 ($5.6 million), followed by land developers ($3.4 million), commercial builders ($3.0 million), single-family builders ($2.8 million), manufacturers of modular/panelized/log homes ($2.7 million), commercial remodelers ($0.8 million), and residential remodelers ($0.8 million).
Age, Ethnicity, and Gender
The median age of NAHB builder members in 2014 was 56 years. Just over half of builder members are 55 years of age or older. Of the remaining half, 27 percent are 45 to 54 years of age and 21 percent are younger than 45 years of age (Exhibit 7).
Ninety-seven percent of members identified themselves as White, alone; 1 percent as Black or African-American, alone; 1 percent as American Indian or Alaska Native, alone; and 1 percent as some other race. About half a percent of builder members selected more than one race on the NAHB census. Two percent of builder members are of Hispanic, Latino, or Spanish origin (Exhibit 8).
Regardless of the type of company, the share of builder members who identify themselves as White, alone, never drops below 93 percent, and the share of those with a Hispanic, Latino, or Spanish origin never rises above 6 percent.
The share of builder members who are women was 7 percent every year from 2010 to 2013, but in 2014, it fell to 6 percent (Exhibit 9). The share of women is significantly higher among manufacturers of modular/panelized/log homes, at 21 percent, than among all other types of builder members, at 7 percent or less.
Over Half of Builder Members Have a Degree
Since 2008, the share of NAHB builder members with a college or advanced degree has remained above 50 percent. In 2014, only 1 percent did not finish high school. Thirteen percent completed high school, 7 percent have career technical training, and 25 percent have had some college education. The remaining 54 percent have a college or graduate degree (Exhibit 10).
The share of builder members with a degree (either undergraduate or graduate) differs across builder categories. Seventy percent of land developers have a degree, compared to only forty-seven percent of remodelers (both commercial and residential).
Almost Two-Thirds Have Been Members for a Decade or More
The median NAHB membership tenure among builders is 14 years, with 64 percent of builder members having more than a decade of membership. Fifteen 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.