The Cost of Doing Business Study, 2022 Edition

By NAHB Business Management & Information Technology

Like most U.S. businesses, many builders shut down operations for some time in 2020, reinvented processes to ensure safety, provided health training to workers, limited visits to model homes, and adapted to remote work for office staff. Builders in 2020 also had to quickly learn how to navigate the uncertainties of supply-chain disruptions that skyrocketed pricing and decreased the availability of building materials. As if these issues were not challenging enough, the industry's chronic labor shortage worsened as fear of the virus spread among workers and subcontractors. Whether you build two homes or 2,000 homes a year, The Cost of Doing Business Study, 2022 Edition provides statistics and analysis so you can see how you compare to other builders. This one-of-a-kind resource discusses financial performance according to builder type and size, as well as industry-wide averages using these key indicators including gross margins, net profit, cost of sales, operating expenses, and financial ratios. Results from this survey provide single-family builders with current information to benchmark their employees' level of compensation and benefits.

• Language: English
• Publisher: BuilderBooks
• Release date: Feb 1, 2022
• ISBN: 9780867187908

Book preview

Front Cover of The Cost of Doing Business Study, 2022 EditionBook Title of The Cost of Doing Business Study, 2022 Edition

The Cost of Doing Business Study, 2022 Edition

BuilderBooks, a Service of the National Association of Home Builders

Disclaimer

This publication provides accurate information on the subject matter covered. The publisher is selling it with the understanding that the publisher is not providing legal, accounting, or other professional service. If you need legal advice or other expert assistance, obtain the services of a qualified professional experienced in the subject matter involved. The NAHB has used commercially reasonable efforts to ensure that the contents of this volume are complete and appear without error; however the NAHB makes no representations or warranties regarding the accuracy and completeness of this document’s contents. The NAHB specifically disclaims any implied warranties of merchantability or fitness for a particular purpose. The NAHB shall not be liable for any loss of profit or any other commercial damages, including but not limited to incidental, special, consequential or other damages. Reference herein to any specific commercial products, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favored status by the NAHB. The views and opinions of the author expressed in this publication do not necessarily state or reflect those of the NAHB, and they shall not be used to advertise or endorse a product.

©2022 by NAHB. All rights reserved. This Cost of Doing Business Study, 2022 Edition is a copyrighted work owned by the National Association of Home Builders of the United States (NAHB). Without advance written permission from the copyright owner, no part of this book may be reproduced, distributed, or transmitted in any form or by any means, including, without limitation, electronic, optical or mechanical means (by way of example and not limitation, photocopying, or recording by or in an information storage retrieval system). For information on permission to copy material exceeding fair use, please contact: BuilderBooks, 1201 15th Street NW, Washington, DC 20005-2800. Phone [phone].

Trademarks: National Association of Home Builders, NAHB, BuilderBooks, and the NAHB logo are registered trademarks of the National Association of Home Builders of the United States.

Published in the United States of America

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ISBN-13: 978-0-86718-789-2

eISBN-13: 978-0-86718-790-8

For further information, please contact:

National Association of Home Builders

1201 15th Street, NW

Washington, DC 20005-2800

BuilderBooks.com

Contents

Contents

List of Figures

List of Tables

Acknowledgments

Introduction

1. All Survey Respondents

2. Builders with Land Costs

3. Builders without Land Costs

4. Combination Builders

5. Small-Volume Builders

6. Production Builders

7. Builder Financial Performance by Region and Business Model

8. Operations

9. Historical Data and Trends

Appendix I: 3 Steps To Speed Up Profitability

Appendix II: Understanding Your Income Statement

Appendix III: Is Your Job Site Safe … Or Just Lucky?

Appendix IV: The Cost of Doing Business Survey Instrument

Appendix V: Detailed Tables

Glossary

Figures

Chapter 1. All Survey Respondents

1.1. Cost of sales, expenses, and net profit

1.2. Profit margins and owner’s compensation

Chapter 2. Builders with Land Costs

2.1. Cost of sales, expenses, and net profit

Chapter 3. Builders without Land Costs

3.1 Cost of sales, expenses, and net profit

Chapter 4. Combination Builders

4.1. Cost of sales, expenses, and net profit

Chapter 5. Small-Volume Builders

5.1. Cost of sales, expenses, and net profit

5.2. Small-volume builders with land costs: cost of sales, expenses, and net profit

5.3 Small-volume combination builders: cost of sales, expenses, and net profit

Chapter 6. Production Builders

6.1. Cost of sales, expenses, and net profit

6.2. Production builders with land costs: cost of sales, expenses, and net profit

6.3 Production combination builders: cost of sales, expenses, and net profit

Chapter 7. Builder Financial Performance by Region and Business Model

7.1. Regional differences in costs and profit margins

7.2. Profits and owner’s compensation by business model

7.3. Balance sheet by business model

Chapter 8. Operations

8.1. Main operation

8.2. Years in the residential construction business

8.3 Average number of homes closed in 2020 by type of builder

Chapter 9. Historical Data and Trends

9.1. Builders’ net profit margins since 2000

9.2. Builders’ gross profit margins since 2000

Tables

Chapter 1. All Survey Respondents

1.1. Respondents’ profile

1.2. Gross profit

1.3. Net profit

1.4. Balance sheet

1.5. Financial ratios

1.6. Top and bottom 25%

Chapter 2. Builders with Land Costs

2.1. Gross profit

2.2. Net profit

2.3. Balance sheet

2.4. Financial ratios

Chapter 3. Builders without Land Costs

3.1 Gross profit

3.2 Net profit

3.3 Balance sheet

3.4 Financial ratios

Chapter 4. Combination Builders

4.1 Gross profit

4.2 Net profit

4.3 Balance sheet

4.4 Financial ratios

Chapter 5. Small-Volume Builders

5.1. Gross profit

5.2. Net profit

5.3. Balance sheet

5.4. Financial ratios

5.5. Small-volume builders with land costs: gross profit

5.6. Small-volume builders with land costs: net profit

5.7. Small-volume builders with land costs: balance sheet

5.8. Small-volume builders with land costs: financial ratios

5.9. Small-volume combination builders: gross profit

5.10. Small-volume combination builders: net profit

5.11. Small-volume combination builders: balance sheet

5.12. Small-volume combination builders: financial ratios

Chapter 6. Production Builders

6.1. Gross profit

6.2. Net profit

6.3. Balance sheet

6.4. Financial ratios

6.5. Production builders with land costs: gross profit

6.6. Production builders with land costs: net profit

6.7. Production builders with land costs: balance sheet

6.8. Production builders with land costs: financial ratios

6.9. Production combination builders: gross profit

6.10. Production combination builders: net profit

6.11. Production combination builders: balance sheet

6.12. Production combination builders: financial ratios

Chapter 9. Historical Data and Trends

9.1. Summary data from The Cost of Doing Business studies

9.2. Cost breakdown of a single-family home

9.3. Twelve publicly traded builders

9.4. Pretax profit margins for select publicly traded builders

Acknowledgments

The NAHB Economics