Home Builders in the US Industry Market Research Report from IBISWorld Has Been Updated

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The Home Builders industry experienced a dramatic decline in revenue stemming from the subprime mortgage crisis, the bursting real estate bubble and the collapse of credit markets, however, improvements in the general economy will support industry growth, and the industry will also benefit from improvements in housing demand, lending activity and real estate values. For these reasons, industry research firm IBISWorld has updated a report on the Home Builders industry in its growing industry report collection.

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A stronger economy and improvements in housing demand will support industry growth

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 with economic cycles.

In the five years to 2013, revenue is estimated to have fallen by an average annual rate of 2.5% to $75.1 billion. According to IBISWorld Industry Analyst Jeremy Edwards, “During this period, the industry struggled through a momentous downturn in the housing market, stemming from the subprime mortgage crisis, the burst of the real estate bubble and the collapse of credit markets.” Additionally, as new construction projects slowed, so did the need for new employees; over the five years to 2013, employment is estimated to fall at an average annual rate of 3.2% to 385,664 workers.

“The majority of employees are hired on a contract or per-project basis, which has exacerbated this trend,” says Edwards. The US government provided some reprieve for home builders, however, including the passing of a number of acts to combat plummeting housing prices and demand. For example, the US government implemented the Housing Assistance Tax Act (HATA) in 2008, which provided tax credits to first-home buyers.

In 2013, revenue for the Home Builders industry is expected to rebound as industry activity picks back up; revenue for the year is forecast to increase 13.7%. This trend is forecast to continue over the five years to 2018. Even with this expected growth, industry revenue would still fall short of its prerecession peak, as the collapse of the real estate market continues to reverberate throughout the industry. Still, improvements in the general economy will support industry growth, following the cyclical pattern of boom-and-bust that typifies traditional economic cycles. Additionally, industry profit margins will expand due to improvements in housing demand, lending activity and real estate values.

The Home Builders industry is characterized by a large number of small-scale establishments that service relatively narrow, geographically dispersed markets. The industry also contains a large number of subcontractors that operate as sole-proprietors or partnerships and hire no additional employees.

Over the past five years, the level of market share concentration has decreased. The collapse of property prices during the past five years hurt large businesses who were highly invested in the market. In addition, the industry experienced a greater number of subcontractors operating because consistent work was unavailable. Subdued demand for industry services resulted in firms taking on less full-time staff as a precaution against inconsistent work flows. The hiring of subcontractors has been looked upon favorably because businesses are not required to pay wages while demand is low and workers are not required.
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 the Home Builders 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.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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