Property Taxes by State – 2024

2025-11-26T08:15:30-06:00

Nationally, across the 87 million owner-occupied homes in the U.S., the average amount of annual real estate taxes paid in 2024 was $4,271, according to NAHB analysis of the 2024 American Community Survey. Homeowners in New Jersey continued to pay the highest real estate taxes, paying an average of $9,767, $2,194 more than the next closest state, New York, at $7,573. On the other end of the distribution, homeowners in West Virginia paid the lowest average amount of real estate taxes at $1,044. The map below shows the geographic variation of average annual real estate taxes (RETs) paid. The 2024 data indicate that there is no state where real estate taxes paid were on average less than $1,000, the first time in the ACS data. There continues to be noticeable differences in the average amount of taxes paid based on geographic location. States in the Northeast, where home values tend to be higher, pay more on average in real estate taxes compared to states in other parts of the nation. Average Effective Property Tax Rates While average annual real estate taxes paid is important, it provides an incomplete picture. Property values vary across states, which explains some, if not most, of the variation across the nation in average annual real estate taxes. To control for property values and create a more informative state-by-state analysis, NAHB calculates the average effective property tax rates by dividing aggregate real estate taxes paid by aggregate value of owner-occupied housing within each state. For example, the aggregate real estate taxes paid across the U.S. was $370.0 billion with an aggregate value of owner-occupied real estate totaling $41.7 trillion in 2024. Using these two amounts, the average effective property tax rate nationally was $8.88 ($370.0 billion/$41.7 trillion) per $1,000 in home value. This effective rate can be expressed as a percentage of home value or as a dollar amount taxed per $1,000 of a home’s value. The map below displays the effective rate by state. Illinois, for the second consecutive year, had the highest effective property tax rate at $17.93 per $1,000 of home value. Hawaii continued to have the lowest effective property tax rate at $3.08 per $1,000 of home value. Hawaii also had the highest average home value, at $1.05 million in 2024. Notably, the average effective property tax rate tends to be higher in the Northeast, in addition to the presence of higher home values.

Property Taxes by State – 20242025-11-26T08:15:30-06:00

Building Material Prices Continued to Rise in September

2025-11-25T11:18:14-06:00

Aggregate residential building material prices rose at their fastest pace since January 2023 in the latest Producer Price Index release from the Bureau of Labor Statistics. Input energy prices increased for the first time in over a year, while service price growth remained lower than goods. The Producer Price Index for final demand increased 0.3% in September, after falling 0.1% in August. The index for final demand goods increased 0.9% in September, the largest monthly increase since February 2024. Final demand energy prices were responsible for most of the goods index increase, as they rose 3.5% in September. This index for final demand for services was unchanged in September. The price index for inputs to new residential construction rose 0.2% in September and was up 3.1% from last year. The price of goods inputs was up 0.1% over the month and 3.5% from last year, while prices for services were up 0.3% over the month and 2.5% from last year. Input Goods The goods component has a larger importance to the inputs to residential construction price index, representing around 60%. On a monthly basis, the price of input goods to new residential construction was up 0.1% in September. The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring remaining goods. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index. Energy input prices rose 1.0% in September and were 3.0% higher than one year ago. Building material prices were up 0.1% in September and up 3.5% compared to one year ago. The 3.5% year-over-year increase is the largest increase since the 4.9% experienced back in January 2023. Residential building material price inflation slowly accelerated over the year, after starting around 2.0%. The largest year-over-year price changes continue to be parts for construction machinery and equipment, sold separately, up 41.3% compared to September of last year. Metal molding and trim prices are up 31.0% from last year. Ready-mix concrete, a key input to new residential construction, has shown little price growth in 2025, up only 0.4% from last year. Additionally, softwood lumber prices were down 2.3% in September from last year. Lumber prices have experienced declines over the past few months despite higher tariffs now in place. Ongoing weaknesses during 2025 in new residential construction have led to an acute oversupply of lumber on the market, with demand below expectations. Input Services Prices for service inputs to residential construction reported an increase of 0.3% in September. On a year-over-year basis, service input prices were up 2.5%. The price index for service inputs to residential construction can be broken out into three separate components: a trade services component, a transportation and warehousing services component, and a services excluding trade, transportation and warehousing component (other services).  The most significant component is trade services (around 60%), followed by other services (around 29%), and finally transportation and warehousing services (around 11%). The largest component, trade services, was up 3.1% from a year ago. The other services component was up 1.3% over the year.  Lastly, prices for transportation and warehousing services rose 2.6% compared to August of last year.

Building Material Prices Continued to Rise in September2025-11-25T11:18:14-06:00

Where Renters and Owners Face the Highest Cost Burdens

2025-11-24T11:16:25-06:00

The housing affordability crisis continues to disproportionately affect renters, with more than half of renter households experiencing high-cost burdens — i.e., paying 30% or more of their income on rent and utilities. At the same time, current home owners, buoyed by significant home equity gains and locked in by below-market mortgage rates, are in a more advantageous financial position to weather the growing affordability crisis. According to the latest 2024 American Community Survey (ACS), more than half of all renter households (50.3%), or 23.2 million, are burdened by housing costs. Among home owners, this share is less than a quarter (24.3%) representing 21 million households. As a result, states and counties with higher shares of renters in their housing markets are more likely to have higher overall shares of households with cost burdens. Geographically, Florida, Nevada, and California have the largest concentration of cost-burdened renters. In Florida, 60% of all renters pay more than 30% of their income on rent and utilities. In Nevada, the share is 57%, and in California, 55% of renters experience housing cost burdens. Even in states with comparatively low renter cost-burden rates—such as South Dakota, Alaska, and North Dakota—more than one-third of renters still spend 30% or more of their income on housing. For home owners, cost-burden rates are generally lower, but the geographic pattern mirrors that of renters. California, Florida, and several Northeastern states report the highest shares of cost-burdened home owners. California faces the most severe affordability challenges, with one in three owners paying more than 30% of their income for housing. Florida and Hawaii follow closely, with 31% of existing home owners struggling to afford their homes. At the opposite end of the spectrum, nine states in the Midwest and South report that fewer than 20% of homeowners are cost-burdened. West Virginia and North Dakota have the lowest rates, at just 16%.

Where Renters and Owners Face the Highest Cost Burdens2025-11-24T11:16:25-06:00

Location, Location, Location: How Place and Neighborhood Shape Home Values

2025-11-18T10:14:57-06:00

The value of a single-family home depends not only on its physical features but also on its location and neighborhood context. In this second part of our two-part series, we examine how geography and neighborhood quality further influence single-family detached home values across the United States. Not surprisingly, location remains one of the strongest drivers of home values (Figure 2). Homes in a big metropolitan area are valued 60% higher than comparable homes in non-metro areas, while those in smaller or midsized metro areas are 22% more. Home values also vary significantly across Census Divisions. Using New England as the baseline, homes in the Pacific Divisions, including Alaska, California, Hawaii, Oregon, and Washington, are valued around 35% higher values on average. By contrast, homes in the rest of the divisions show substantially lower values relative to New England. Homes in the East South Central and West South Central divisions are more than 60% lower in value, while those in the Middle Atlantic are about 30% lower. In the East North Central and West North Central Divisions, home values are roughly 47% and 46% lower, respectively. Homes in the South Atlantic are 39% lower, and those in the Mountain Division are about 19% lower. People are willing to pay a premium for a better neighborhood. This analysis shows that a higher overall neighborhood quality rating, measured on a 1 to 10 scale, contributes about a 2% increase in home value for every 1-point rise (Figure 3). For example, moving from a neighborhood rated 5 to one rated 7 could increase your home value by 4%. On the other end, the impact of specific negative conditions is substantial (Figure 4). Homes located near abandoned or vandalized buildings have 17% lower values. Additionally, the presence of visible trash nearby reduces home values by 8%. Improving the broader neighborhood environment could have as much impact on the final home value as upgrades inside the home. Please click here to be redirected to the full special study.

Location, Location, Location: How Place and Neighborhood Shape Home Values2025-11-18T10:14:57-06:00

What Home Features Add the Most Value?

2025-11-17T08:16:03-06:00

The value of a single-family home is shaped by many factors, but its physical features remain among one of the most influential. Using the latest 2023 American Housing Survey (AHS), this study focuses on which home features genuinely boost single-family detached home values and by how much. Key findings show that the overall square footage of the home and the number of bathrooms stand out as especially strong value drivers, while other features such as the number of bedrooms and the presence of amenities also play a role. In this first part of our two-part blog series, we focus on the physical features of single-family homes. The second part will explore how location and neighborhood quality further influence home values across the United States. Home size is one of the strongest value drivers in today’s housing market, as shown in Figure 1. Compared with smaller homes under 1,000 sq. ft., homes between 1,000 and 2,000 sq. ft. are valued about 17% higher. Moving up to homes between 2,000-3,000 sq. ft. increases value by around 30%, while homes with 3,000 sq. ft. or more adds 55% more to the market value.  These effects are measured after accounting for differences in region, age of structure, and other key features. While both the number of bathrooms and bedrooms contribute to single-family home values, the number of bathrooms has a larger impact. Each additional full bathroom increases home value by approximately 32%, compared to about 5% for an additional bedroom, holding the square footage and other features constant. Even a half bathroom brings meaningful returns, adding an estimated 15%. The age of the home is also a contributing factor to the final market value, even after accounting for other features and neighborhood conditions. Compared to homes built before 2010, homes built between 2010 and 2019 have 13% higher values, and homes built after 2020 are valued 19% higher. These premiums likely reflect improvements in energy efficiency, insulation, and modern building systems that are appealing to more buyers. Other amenities also bring solid returns, like garages, fireplaces, and centralized air conditioning. Garages add around 10% to home value; Besides a protected parking space, garages offer the flexibility for additional storage or turning it into a workshop/hobby space.  Having a fireplace can add value to a home, increasing its value by around 10%. It is appealing to some home buyers, as it not only provides a cozy ambiance, but also could reduce heating costs in some regions. Centralized AC adds about 7% to home value nationwide, but its impact varies across the divisions. In the South, including the South Atlantic, East South Central, and West South divisions, centralized AC adds 23%, 40%, and 48% more values, respectively. Please click here to be redirected to the full special study.

What Home Features Add the Most Value?2025-11-17T08:16:03-06:00

State-Level Analysis of Canadian Softwood Lumber Trade

2025-11-11T09:15:24-06:00

International trade remains a source of volatility across the building materials sector, particularly in the softwood lumber market. Recent adjustments to antidumping and countervailing duty (AD/CVD) rates, combined with the imposition of Section 232 tariffs, have increased the trade-related cost of Canadian imports. As a result, the average duty rate on Canadian softwood lumber entering the U.S. has tripled, now hovering around 45%. These elevated trade barriers pose additional challenges for home builders who rely on Canadian lumber to meet construction demand. In 2024, Canadian softwood lumber exports to the U.S. totaled $5.1 billion, accounting for approximately 74% of the total value of softwood lumber imports. Canada remains the dominant supplier and a longstanding trade partner in the sector. Trade data from the U.S. Census Bureau enables tracking of import destinations at the state level. The majority of Canadian softwood lumber enters through the International Falls, MN port of entry, which saw $840 million in imports in 2024, which is roughly $150 million more than the next busiest port, Blaine, WA. These figures represent a decline from 2021 and 2022, largely due to lower U.S. lumber prices during the current period. This analysis invites the question of where Canadian softwood lumber imports are ultimately headed within the United States. In 2024, Washington state was the top destination, receiving $560.1 million worth of imports. Texas followed closely behind with $451.7 million, reflecting strong demand in the southern housing market. On the other end of the spectrum, Alaska recorded the lowest import volume, with just $284,053 in softwood lumber shipments. However, it is important to note a key limitation in the data. The “state of destination” reflects where the importer is located or where the shipment is initially received, not necessarily where the lumber is ultimately used. This means that while trade data can highlight logistical patterns, it does not fully capture the final point of consumption, especially in cases where materials are redistributed across state lines.

State-Level Analysis of Canadian Softwood Lumber Trade2025-11-11T09:15:24-06:00

Better Growth, Larger Deficits: CBO Fiscal Outlook

2025-10-17T08:16:14-05:00

The Congressional Budget Office (CBO) is a key nonpartisan score keeper that measures the effects of policy changes by the Federal Government. With several policy changes since January of this year, including the One Big Beautiful Bill Act (OBBBA), stricter immigration, and higher tariffs, the CBO updated its economic projections through 2028. Primarily, the CBO forecasts higher growth in the coming year with higher deficits also around the corner. The updated CBO view of the economy projects lower GDP growth in 2025 due to negative effects of tariffs. However, this is followed by stronger growth in 2026 as supply chains adjusted to tariffs and the OBBBA boosts consumption and private investment. More growth is forecasted for 2027 and 2028 as the economy adjusts to lower net immigration but is partially offset by higher domestic production because of tariff protection. In the CBO’s analysis: At the end of 2028, the level of real GDP is about 0.1 percent higher than it was in CBO’s January 2025 projections because of the economic effects of the reconciliation act, higher tariffs, and lower net immigration; the effects of interactions among those factors; and adjustments to reflect recently published data. CBO Real GDP Growth Real GDP grew at an annualized rate of 3.8% in the second quarter of 2025, well above the decline of 0.5% estimated in the first quarter of this year. Per the CBO’s revised forecast, the largest increase in the quarterly growth forecast is in the second quarter of 2026. Real GDP growth was previously forecasted at 1.8% but is now forecasted at 2.5%, a 0.7 percentage point increase. The increases in GDP growth are a result of higher household after-tax income (boosts personal consumption), favorable treatment of private investment, and higher Federal Government spending on border security. All these factors boost overall demand, which in turn creates the risk of higher inflation. In the CBO’s assessment, this results in the Federal Reserve lowering interest rates at a slower pace than it might have otherwise done. The CBO GDP growth forecasts for 2027 and 2028 are essentially unchanged from the previous January forecast. On the residential construction front, 2025 has so far been a slower year than expected. In January, the CBO forecasted real residential fixed investment (RFI) to grow above 5% through the start of 2027 with the expectation that interest rates would fall faster, and pent-up demand coupled with a limited supply of existing homes for sale would boost new construction. Instead for 2025, interest rates have in fact remained higher for longer and put a damper on housing construction. RFI has negatively contributed to GDP for the first two quarters of 2025 and contracted 1.3% and 4.7% in the first and second quarters. The CBO’s forecasts show declines in RFI as home building starts entering 2026. The September forecasts are well below previous levels, with none forecasted above 3.0% until the first quarter of 2028. Federal Government Fiscal Outlook While the economy is expected to grow faster under the passage of OBBBA, the Federal Government’s fiscal outlook did not improve. The CBO’s original deficit outlook assumed that the 2017 tax policy changes would expire, leaving many taxpayers facing higher tax payments in 2026 but also reducing the level of annual federal deficits. With the passage of the OBBBA, which continued many of the policies of Tax Cuts and Jobs Act of 2017 and established some new tax policy, annual deficit totals are a total of $3.4 trillion larger over the ten-year budget window than in the prior CBO outlook. Deficits are larger each year after 2025 but more pronounced in years leading up to 2028 as some provisions expire in the years following. The deficit is expected to be smaller by $21.1 billion in 2025 and peak at $602.4 billion larger in 2027. For housing stakeholders, long-term fiscal deficits risk higher inflation and therefore higher interest rates. More government debt means more expensive mortgages and therefore more challenging housing affordability conditions. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Better Growth, Larger Deficits: CBO Fiscal Outlook2025-10-17T08:16:14-05:00

Square Foot Prices Moderate in 2024

2025-10-02T08:19:47-05:00

Median square foot prices for new single-family detached (SFD) homes started in 2024 grew modestly, according to NAHB’s analysis of the latest Survey of Construction (SOC) data. For custom, or contractor-built, homes, the median price was $166 per square foot of floor space1, up slightly from $162 in 2023. For spec starts, after excluding record-high improved lot values, the median was $153 per square foot of floor area, inching up from $150 a year earlier. There is still notable regional variation in square footage prices. In New England, after excluding lot values, half of the spec homes started in 2024 had prices exceeding $282 per square foot. In the East South Central division, the median was $133, representing the most affordable prices per square foot.Contract prices of custom homes do not include the value of an improved lot, as these homes are built on the owner’s land (with either the owner or a contractor acting as a general contractor). Consequently, contract prices are typically reported as lower than the sale prices of spec homes. To make the comparison more meaningful, the cost of lot development is excluded from sale prices in this analysis. The recent modest square foot price changes marked a sharp decline from the double-digit price hikes that characterized home building in the post-pandemic environment. As recently as 2022, increases in square foot prices of new SFD homes were approaching 20%, more than doubling the historically high U.S. inflation rate of 8%. The deceleration for median square foot prices reflects slower growth in building material prices and home building wages in 2024. The shifts towards cost-effective methods, such as building homes on slabs rather than with full or partial basements, also contributed to moderating the increases in square foot prices.In the for-sale market, the New England division registered the highest and fastest-rising median square foot prices. Half of the new for-sale SFD homes started here in 2024 were sold at prices exceeding $282 per square foot of floor area, paid on top of some of the most expensive lot values in the nation. The Pacific division came in second, with median prices of $223 per square foot. The most economical SFD spec homes were started in the South region, where the median sales price per square foot was below the national median of $153. The East South Central division is home to the least expensive for-sale homes. Half of all for-sale SFD homes started in the division in 2024 registered a square foot price of $140 or lower, paid on top of the most economical lot values in the country. The other two divisions in the South— South Central and South Atlantic—registered median prices of $144 and $147 per square foot, ranking them the second- and third-lowest medians in the nation. Because square foot prices in this analysis exclude the cost of developed lots, highly variable land values cannot account for regional differences in square footage prices. However, overly restrictive zoning, stricter building codes, and higher regulatory costs undoubtedly lead to higher per-square-foot prices. Regional differences in home types, common features, and construction materials also contribute to price variations. In the South, for example, lower square foot prices partially reflect a less frequent regional occurrence of costly new home features like basements. In the custom home market, new contractor-built SFD homes in the Northeast were more expensive to build. Half of custom SFD homes started in New England in 2024 registered prices greater than $190 per square foot of floor area. In the neighboring Middle Atlantic, the median custom home price was similarly high at $188 per square foot. The East North Central division came in close third, with a median of $186 per square foot of floor space. The East South Central and West South Central divisions are home to the most economical custom homes started in 2024, with half of the new custom homes registering prices at or below $129 and $138 per square foot of floor space, respectively. The remaining division in the South region — South Atlantic — recorded slightly higher median square foot contract prices of $155, still below the national median of $166. In the West, the Mountain division registered noticeable declines in square foot prices over the last two years, erasing a substantial portion of the post-pandemic double-digit annual hikes. Half of the custom SFD homes started here in 2024 had prices of $169 per square foot or higher. The corresponding median price in the neighboring Pacific was $167 per square foot. In comparison, during the post-pandemic home building boom, the median crossed the $200 mark for homes started in 2022 in the Mountain Division. Typically, when excluding improved lot values, contractor-built custom homes are more expensive per square foot than for-sale homes. Over the last two decades, this custom home premium averaged slightly above 9%, suggesting that new custom home buyers are not only willing to wait longer to move into a new home but also pay extra for pricier features and materials. However, these custom home premiums (see the chart below) largely disappeared in the post-pandemic environment marked by supply chain disruptions, soaring building materials costs, and home prices hitting new highs each month. In the last two years, the custom home premium returned to historic norms, indicating that the post-pandemic trend has reversed, and custom home buyers are once again willing to pay more for higher-end features and materials. The NAHB estimates in this post are based on the Survey of Construction (SOC) data. The survey information comes from interviews with builders and owners of the selected new houses. The reported prices are medians, meaning that half of all builders reported higher square foot prices, and the other half reported prices lower than the median. While the reported median prices cannot reflect the price variability within a division, and even less so within a metro area, they, nevertheless, highlight the regional differences in square foot prices. For the square footage statistics, the SOC uses all completely finished floor space, including space in basements and attics with finished walls, floors, and ceilings. This does not include a garage, carport, porch, unfinished attic, utility room, or any unfinished area of the basement. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Square Foot Prices Moderate in 20242025-10-02T08:19:47-05:00

The Fed Cuts and Projects More Easing to Come

2025-09-17T15:15:58-05:00

After a monetary policy pause that began at the start of 2025, the Federal Reserve’s monetary policy committee (FOMC) voted to reduce the short-term federal funds rate by 25 basis points at the conclusion of its September meeting. This move decreased the target federal funds rate to an upper rate of 4.25%. Economically, the cut is justified given signs of a softening labor market and moderate inflation readings. However, Chair Powell characterized today’s easing as a “risk management cut,” rather than one driven by fundamental changes in the economic outlook. NAHB is forecasting another 75 basis points of easing in the coming quarters, with 25 of that total coming before the end of the calendar year. The Fed announced no changes to its ongoing balance sheet reduction policy. While the Fed is easing on the short-end of the yield curve, the ongoing quantitative tightening (QT) program is still exerting upward pressure on mortgage interest rates and is partially responsible for the elevated spread of mortgage rates over the 10-year Treasury rate. The Fed’s balance sheet has contracted from almost $9 trillion in May 2022 to $6.6 trillion in September. A hypothetical slowing of QT for mortgage-backed securities would reduce mortgage interest rates, perhaps by 25 basis points. The Fed summarized current economic conditions as follows: “Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.” The FOMC statement also indicated that uncertainty about the outlook remains “elevated.” Given the size of recent employment revisions, it might be worth noting that both the outlook and some of the current data reporting is uncertain. Chair Powell noted in his press conference that activity in the housing market remains “weak,” consistent with recent data for the home building sector. He also noted that “housing was at the center monetary policy.” Powell once again noted that a housing shortage exists that lies beyond monetary policy, alluding to the challenges builders face from issues like regulatory cost burdens. The September FOMC policy decision was expected by markets, given recent communication from the Fed, including Chair Powell’s remarks at the Jackson Hole monetary policy conference. For this reason, much of the effect of today’s decision was already priced into long-term interest rates, including a decline for the average of the 30-year fixed rate mortgage. This rate has declined by 20 basis points to 6.35% over the last month, per Freddie Mac. In fact, the 10-year Treasury rate barely moved in response to today’s announcement. A growing risk for long-term rates, including mortgage rates, comes from federal government debt and deficits. In contrast to movement for long-term rates, the reduction of the federal funds rate will have a direct, beneficial effect on interest rates for acquisition, development and construction loans, the key financing channel for private builders who build more than 60% of single-family homes. This will reduce lending costs for builders across the nation and enable more attainable supply. There was considerably more internal drama entering today’s FOMC decision. Besides marking a resumption of Fed easing, today’s meeting featured newly installed Fed Governor Stephen Miran and the participation of embattled Governor Lisa Cook. It is worth noting that Miran was the only dissenter at today’s meeting. Instead of voting for a 25-basis point cut, Miran preferred a 50-basis point reduction. That said, today’s decision featured less division among the FOMC voting members than some analysts expected, which is a positive with respect to the Fed’s independence. A revised Summary of Economic Projections (SEP) was also published today. The SEP provides a view of Fed Governors’ and Federal Reserve Bank Presidents’ outlook for economic conditions, inflation expectations and future monetary policy actions (only 12 of the 19 SEP respondents are voting members at each meeting). While there was little dissension in today’s FOMC policy decision, the SEP reveals considerable disagreement for the outlook. Seven SEP respondents projected no additional cuts for the remainder of the year. Twelve projected more cuts. The median projection suggests two more rate cuts for 2025. One respondent, most likely Governor Miran, provided an outlook of five more 25 basis point cuts before the end of 2025. On a median basis, the Fed sees weaker economic growth ahead. The SEP reports a 1.6% GDP growth rate (measuring the 4th quarter to 4th quarter change) for 2025, 1.8% in 2026 and 1.9% in 2027. The SEP projection reports only small increase in the unemployment rate, with a peak rate ahead of 4.5% ahead. For the median SEP respondent, the economy is not seen as reaching the target 2% core CPE inflation rate until 2028. It is worth noting that prior editions of the SEP also saw this target as effectively two years away. Nonetheless, while taking longer than previously expected, the otherwise declining trend for expected inflation in the years ahead suggests the Fed sees any possible tariff effects on inflation will be one-off or otherwise limited, as Governor Waller in particular has explained. Overall, today’s decision was widely expected. Much of the benefit of today’s easing was already priced into long-term interest rates, but the rate cut will benefit business loan finance conditions. Further, additional rate cuts lie ahead, although as Chair Powell noted, “policy is not on a pre-set course.” Future Fed actions will depend on incoming data and the evolving policy environment. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

The Fed Cuts and Projects More Easing to Come2025-09-17T15:15:58-05:00

Most Home Builders are Small Businesses

2025-08-27T08:27:22-05:00

Despite historically low self-employment rates and the rising market share of top ten builders, residential construction remains an industry dominated by independent entrepreneurs, with nearly 80% of home builders and specialty trade contractor firms being self-employed independent contractors. Even among firms with paid employees, the industry continues to be dominated by small businesses, with 63% of homebuilders and two out of three specialty trade contractors generating less than one million dollars in total business receipts. The new estimates are based on the 2022 Economic Census and Nonemployer Statistics data.1The Economic Census covers several construction subsectors that comprise the home building industry: Residential Building Construction (RBC) – Single-family general contractors (except for-sale builders) – Multifamily general contractors (except for-sale builders) – New housing for-sale builders Residential Remodelers Land Subdivision (or land developers) Specialty Trade Contractors (STC) The 2022 statistics show that the majority of residential construction businesses are self-employed independent contractors.  There are over 813,000 nonemployer firms in residential building construction (RBC), accounting for close to 80% of all establishments. In land subdivision, more than 9,000 independent contractors account for 68% of land subdivision firms.  Over 1.9 million specialty trade independent contractors make up 79% of all STC establishments. These nonemployer firms also account for almost half of the full-time employees (FTE) in residential building construction, 26% in land subdivision, and 28% in STC.  Most of these self-employed mom-and-pop firms are very small, with annual receipts averaging under $103,000 for residential building construction, and under $70,000 for specialty trade contractors. Self-employed independent contractors in land subdivision average around $288,000 in annual business receipts. As a result, these nonemployer firms make up only 12% of all sales and receipts generated by residential building construction and land subdivision, and 9% of specialty trade contractors’ revenue. Among residential construction businesses with paid employees, remodeling, land subdivision, and specialty trade subcontractors (STC) companies tend to be smaller.  Three out of four remodeling establishments, 63% of land developers, and 59% of STC companies generate under $1 million in receipts.   Home builders are typically somewhat larger, with about 45% of companies reporting annual sales over $1 million. Among homebuilders, multifamily general contractors tend to be the largest. However, the Census Bureau did not disclose the number of the largest (with revenue over $100 million) and smallest (with revenue under $100K) multifamily and single-family custom builders in 2022. As a result, the revenue spectrum for MF and SF contractors is incomplete and is presented in a separate chart.  Multifamily contractors are typically larger compared to single-family contractors and for-sale builders (who build on land they own and control). Ten percent of multifamily contractors reported annual sales between $10 million and 25 million, and an additional 11% earned between $25 million and $100 million in 2022.   Under the most recent U.S. Small Business Administration (SBA) size standards, the vast majority of residential construction companies qualify as small businesses. The most recent small business size limits for all types of builders are $45 million, $34 million for land subdivision, and $19 million for specialty trade contractors. By these standards, almost all remodelers and single-family contractors, and at least 98% of land developers, and 96% of specialty trade contractors, easily qualify as small businesses.  The Economic Census, like many other federal statistics programs, collects data only on establishments with payroll employees. The Nonemployer Statistics Program by the Census Bureau collects annual data for businesses that have no paid employees, including the number of businesses and total receipts by industry, which largely come from the IRS. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Most Home Builders are Small Businesses2025-08-27T08:27:22-05:00
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