A stronger economy and consumer sentiment will lead to improvements in housing demand
Los Angeles, CA (PRWEB) October 30, 2012
Homeownership is the cornerstone of the American Dream, with housing typically accounting for the largest percentage of individual wealth in the United States. Housing investment is also crucial for the US economy because it influences the pace of general economic growth and provides an important fiscal and monetary policy connection between governments and households. Consequently, revenue for the Home Builders industry traditionally fluctuates dramatically with economic cycles. “Americans generally prefer to live in large single-unit housing rather than high-density apartments and townhouses,” says IBISWorld industry analyst Deonta Smith, referencing the US Census Bureau, which reports that single-family home building accounts for about 81.1% of total residential construction (not including property improvements). In addition to new home construction, the Home Builders industry also operates within the home improvement sector, which accounts for about 10.0% of revenue. Small-scale establishments that operate in narrow, regional markets dominate the industry.
In the five years to 2012, Home Builders industry revenue is expected to fall an average annual 13.8% to $186.5 billion. “During this period, the industry experienced the most significant downturn in the housing market,” Smith says, “reflecting the subprime mortgage crisis, the burst of the real estate bubble and the collapse of credit markets.” In line with falling revenue, as new construction projects slowed, so did the need for new employees. Because the majority of employees are hired on a contract or per-project basis, employment dropped an estimated 12.2% per year on average to 709,553 workers as demand fell.
In 2012, industry revenue is expected to increase 11.1% as industry activity picks back up. This trend is forecast to continue over the five years to 2017; however, revenue will not push above the 2005 peak due to the severity of the real estate market collapse. During the five-year period, improvements in the general economy will support industry growth, following the cyclical pattern of boom-and-bust that is traditional of economic cycles. Additionally, the industry will benefit from improvements in housing demand, lending activity and real estate values. For more information, visit IBISWorld’s Home Builders in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in this industry primarily construct single-family homes, where units are separated by ground-to-roof walls and have no units above or below. The industry also includes remodeling of houses and other residential buildings. Industry operators are general contractors, design-build firms and single-family construction management firms acting as general contractors and builders. The industry does not include speculative builders or contractors that build on their own account for sale.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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