According to the Statistics of U.S. Businesses (SUSB), the annual series compiled by the Census Bureau, 20,000 home builders and remodelers entered the industry each year of the recent economic downturn. During 2010, the latest year data are available, the number of home builders and remodelers entering the market increased by 8 percent while the number leaving decreased by nearly 21 percent. Although establishments leaving outpaced those entering in 2010, the data highlights the first year-over-year increase in new entrants since the start of 2006.
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An establishment is defined by the Census Bureau as a single physical location with a payroll. Establishments entering an industry are referred to as births, whereas establishments leaving an industry are referred to as deaths. Analyzing the flow of establishment births and deaths provides insight into the overall health of an industry. In general, births exceed deaths during periods of industry expansion, while deaths exceed births during periods of industry contraction.
The residential building industry, which includes establishments engaged in the construction or remodeling of single-family and multifamily residential buildings, experienced a period of prolonged expansion from 2001 to 2007 (more births than deaths) followed by contraction from 2008 to 2010 (vice versa).
However, the data for the most recent year available, 2010, show a promising account of the industry whereby there are both increases in establishment births and decreases in establishment deaths. The upticks in builder confidence and construction activity suggest that this positive turnaround will likely continue.
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