NAHB analysis of the latest Economic Census data shows that, on average, residential construction establishments were able to cover their hard and soft construction costs and generate positive profits in 2012.

The 2012 data show that the direct costs of construction – consisting of construction payroll, costs of construction work subcontracted out to others, and costs for materials/supplies – vary from 65 percent of total revenue of specialty trade contractors to 87 percent of the business receipts of multifamily general contractors without land costs. For single-family general contractors (who build on land customers own), the direct costs of construction consume on average 81 percent of the total revenue.

For single-family general contractors, 7 percent of total business receipts go to pay wages of construction workers. Specialty trade contractors, who maintain larger construction payrolls and subcontract out a minimum amount of work, spend on average 19 percent of total revenue on construction payroll. In sharp contrast, multifamily general contractors who subcontract out most of the work, spend only 3 percent on the construction payroll. Their biggest expenditure is the cost of construction work subcontracted out to others, 63 percent of the total revenue. This by far exceeds the typical spending on subcontractors by single-family general contractors – 36 percent, residential remodelers – 28 percent, and specialty trade contractors – 10 percent.

Because multifamily general contractors outsource most of their construction work, they spend relatively less on materials, components, supplies, and selected power and fuels – 21 percent of total business receipts, compared to 37 percent by single-family general contractors, 31 percent by residential remodelers, and 36 percent by specialty trade contractors.  Read the rest of the article

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