The National Association of Home Builders (NAHB) has released its Special Study for Housing Economics results, highlighting the 2020 annual census of who makes up its members. Results showed that today’s average NAHB builder member is a small business owner with medians of five housing starts, five payroll employees and $2.6 million in gross revenue.
Type of Builder
As of this latest census, NAHB totals 37,595 builder members, accounting for about one-third of NAHB’s total membership. Of the builder members, 62.5% are single-family builders, 22.4% are residential remodelers, 4.7% are land developers, 4.6% are commercial builders and 4.2% are multifamily builders. Less than 2% of builder members are commercial remodelers or involved in manufacturing modular/panelized/log homes. This composition does not show a significant change when compared to 2019.
Dollar Volume of Business
According to the study, most NAHB builder members tend to be small businesses. The median annual business volume was $2.6 million, the same as 2019. In the 2020 census, 17% of builder members reported a dollar volume of less than $500,000; 16% reported between $500,000 and $999,999; 41% between $1 million and $4.9 million; 11% between $5 million and $9.9 million; 4% between $10 million and $14.9 million; and 9% reported their dollar volume at $15 million or more. One percent of builder members reported no business activity in 2020.
Builder members started an average of 41 housing units in 2020 (26.3 single-family units and 14.7 multifamily units), but the median number of housing starts was five. The average was skewed by a small number of very large builders and is higher than the first year of the current incarnation of NAHB’s member census in 2008 (30 units), but is down from the average for 2018 (51.5 units). The 2020 census showed that 6% started zero units, 9% started 1 unit, 21% started 2 to 3 units, 15% started 4 to 5 units, 16% started 6 to 10 units, 14% started 11 to 25 units, 10% started 26 to 99 units, 6% started 100 to 499 units and 2% started 500 units or more.
Because they frequently rely on subcontractors and are primarily small businesses themselves, many builders do not have a long payroll. In the 2020 member census, builder members reported a median of just five employees, including those working both construction and non-construction jobs. The median number of payroll employees was significantly higher for manufacturers of modular/panelized/log homes (20), compared to three among land developers, four among single-family builders, four among residential remodelers, seven among commercial remodelers and 10 among multifamily builders and commercial builders.
The average number of employees was considerably higher (15.6 employees: 8.2 construction and 7.4 non-construction workers), but this number is skewed by a small number of very large builders. Thus, the median is most likely a better representation of the typical builder member.
In 2020, almost all builder members were older than 35 years old, with only 3% under the age of 35; 15% aged 35 to 44 years, 24% aged 45 to 54 years, 33% aged 55 to 64 years, and 24% aged 65 years or older. The average builder member in 2020 was 57 years old, which shows a gradual increase in the median age since 2008 when the median age was 52 years old.
For the third year in a row, 9% of NAHB builder members were women, which is the highest this number has been since the member census’s inception in 2008. This trend is consistent with the share of women in the construction industry overall.
The majority of builder members are white, with 97% of builders identifying themselves as white. One percent identified as Black and less than 0.5% identified as either American Indian, Alaska Native, Asian or Pacific Islander. Three percent of builder members identified as being of Hispanic, Latino or Spanish origin.
As far as education is concerned, 56% of builder members either completed college (42%) or have an advanced graduate degree (14%), 24% have some college education, 7% have career technical training, 11% completed high school and 1% have completed only some high school education. These numbers remain consistent with recent years and the percentage of builder members with a college degree or higher is greater for land developers (75%) and multifamily builders (73%) than it is for commercial builders (45%) and residential remodelers (48%).
Tenure as an NAHB Member
Builder members have NAHB members for an average of 17 years (median: 15 years). This is slightly up from recent years. The average tenure is higher for land developers and multifamily builders (21 and 22 years, respectively), compared to commercial remodelers (12 years), residential remodelers (15 years), commercial builders (16 years), manufacturers of modular/panelized/log homes (16 years) and single-family builders (17 years).