Structure of the Home Building Industry

Data on the residential construction industry is available from a variety of disparate sources. Many of these sources have released new information recently. This article pulls together key data on the size of businesses from the Economic Census, on the share of business by the largest firms in the industry compiled by Hanley-Wood[1], on firms entering and leaving the industry from the Business Information Tracking Series, and on the ethnicity of home businesses from the Survey of Businesses Owners. Among other points of interests, the data show that •Home building continues to be composed of a large number of small businesses. •The share of homes built by large national builders declined. •Residential construction is a dynamic industry, with firms entering and leaving at a much higher rate than all U.S. firms. •Residential trade contractors contain a particularly large share of Hispanic businesses. Size of Businesses The standard source of information on the size of businesses in various industries is the Economic Census, which has been conducted every five years since 1967 by the U.S. Census Bureau. The most recent Economic Census is based on business activity that took place in 2007, so the Census Bureau did not begin collecting data for it until 2008, and the final tables for the construction industry were published on October 19, 2010. The Economic Census reports actively for “establishments,” where an establishment is defined as a business unit at a single physical location. A large home building firm may have a number of different establishments. In 2007, slightly over 65% of all home building establishments[2] had annual receipts of under $1 million. Almost 31% generated between $1 million and up to $10 million in annual receipts during the same year. Some 4.1% of home builders finished 2007 with $10 million or more in annual receipts.

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