NAHB: 'Vast majority' of US homebuilders are small businesses
- The National Association of Home Builders has found that 81% of the residential construction industry is comprised of self-employed independent contractors. In companies with paid employees, the NAHB found two-thirds of homebuilders and three-quarters of specialty trade contractors have revenue of less than $1 million.
- Under the most recent U.S. Small Business Administration (SBA) size standards — $36.5 million for builders, $27.5 million for land subdivision and $15 million for specialty trade contractors — the NAHB reports that 96% of homebuilders, 94% of land developers and 97% of specialty trade contractors easily qualify as a small business.
- The NAHB also noted that homebuilders are highly specialized and subcontract out most of their work, meaning they might not have a large number of paid employees. Single-family general contractors have an average of four employees on the payroll, with three directly involved in homebuilding. Speculative builders also report a small number of paid employees, fewer than six. Multifamily general contractors (13 employees) and specialty trade contractors (9 employees) have the largest average annual number of payroll workers.
The NAHB also found single-family general contractors, spec builders and subcontractors account for 36% of total construction revenue, and, for multi-family general contractors, 63% of annual construction receipts are generated by subcontractors. In addition, the NAHB found specialty trade contractors subcontract only 10% of their work.
The NAHB has long brought attention to the fact that the homebuilding industry is not mostly comprised of industry giants like Standard Pacific and Ryland, who recently merged. The association emphasizes that changes in regulations can have a huge impact on the industry’s "vast majority" of small businesses.
For example, the NAHB came out strongly against a recent National Labor Relations Board ruling, which said companies can be held responsible for labor violations committed by their contractors/subcontractors. The NLRB ruled that subcontractors could be considered "joint employees" with their employers, and the NAHB pointed out that the significant use of subcontractors in the homebuilding industry could put builders at a significant risk.
The Waters of the U.S. rule, which seeks to expand the definition of "water" to include pools formed by heavy rainfall, was another issue on which the NAHB took a stand in an effort to protect the industry’s smaller contractors.
- EyeonHousing.org Most Homebuilders are Small Businesses
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