NAHB Remodelers Tackle Jobs of All Sizes, but Greatest Share of Revenue Comes from Large Projects

Answers to questions on NAHB’s Remodeling Market Index (RMI) survey show that remodeling projects in every price range account for at least 9 percent of NAHB remodelers’ business (in dollar volume).  Even jobs that bring in less than $2,500 each account for 10 percent.

Given the small amount of revenue per job, and the challenges that scheduling a large number of relatively small jobs presents to a professional remodeler, it’s perhaps surprising that the under $2,500 share is as high as it is.  Even so, among the price categories specified in the survey, large projects costing at least $100,000 account for the greatest share NAHB remodelers’ business—21 percent.  Next are jobs costing $25,000-$50,000, with an 18 percent share.

According to a source like the American Housing Survey (AHS, sponsored by HUD and conducted by the Census Bureau), $100,000+ projects account for only 7 percent of all remodeling spending reported by home owners.  Almost one-fourth of home owners’ remodeling spending is on projects in the $10,000-$25,000 range.

The remodeler/homeowner share differences suggest that there is a relatively large slice of the pie in certain price ranges not captured by the type of remodeler who belongs to NAHB and responds to the RMI survey.  As a thought experiment, assume that these NAHB-type remodelers capture all of the work the $100,000+ range that involves a home owner hiring a professional contractor, and scale it up to total annual remodeling undertaken by home owners, calculated from the latest (2009) AHS:

The result shows that, even if NAHB remodelers were capturing all available work in the $100,000+ price category, they would be missing $35 billion in activity in the $10,000-$25,000 range.  Some of the difference is homeowners undertaking remodeling projects themselves, but there are also many small contractors in the field who generally don’t belong to trade associations like NAHB or respond to surveys like the RMI.  According to NAHB’s 2011 Member Census, median revenue for NAHB remodelers is a little over half a million, and almost all (over 95 percent) of them have a payroll (with an average of 6 employees).

In contrast, the latest Census statistics show almost 600,000 construction firms and 1.9 million trade contractors who have no payroll employees and average annual revenue of $86,000 and $50,000 respectively (as reported in NAHB’s article on the Structure of the Home Building Industry). These small self-employed businesses—i.e., individuals with a pick-up truck or van—are likely to account for a substantial number of the  jobs priced under $25,000 not captured by NAHB remodelers.

About these ads

4 Responses to NAHB Remodelers Tackle Jobs of All Sizes, but Greatest Share of Revenue Comes from Large Projects

  1. [...] Remodelers who are NAHB members tend to work on larger projects, according to recent survey results. In fact, more than one-third of jobs undertaken by NAHB remodelers have a final price tag of $50,000 or more. The data also indicate that NAHB remodelers perform about 95% of projects totaling $100,000 or more but only about 20% of jobs costing $2,500 or less. [...]

  2. [...] Remodelers who are NAHB members tend to work on larger projects, according to recent survey results. In fact, more than one-third of jobs undertaken by NAHB remodelers have a final price tag of $50,000 or more. The data also indicate that NAHB remodelers perform about 95% of projects totaling $100,000 or more but only about 20% of jobs costing $2,500 or less. [...]

  3. [...] NAHB Remodelers Tackle Jobs of All Sizes, but Greatest Share of Revenue Comes from Large Projects  May 11 [...]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 7,128 other followers

%d bloggers like this: