Ten years ago, as housing’s intoxicated path shot upward into the stratosphere, Builder 100 and the Next 100 companies reported to us a total 142,427 associates working among the 200 firms. Collectively, that year they delivered on 540,100 homes, with a total revenue of more than $186 billion. The means the average selling price of new homes in 2006 clocked in at around $345,000.
Here are a couple of interesting data points to note.
Our 2006 figures break down on a per employee basis to this. Each associate among BUILDER’s top 200 home builders accounted for 3.79 closings, individually correlating to $1.3 million in annual revenue.
People talk about how home builders are stuck in the dark ages, “unimpeded by progress.” But the numbers tell a different story.
Last year, BUILDER’s top 200 companies’s 77,428 associates coalesced to deliver 296,981 homes, tallying up to $111.9 billion in revenue, resulting in an extraordinary average selling price topping $376,668. Each employee associate in our 2016 bucket of Builder 100 and Next 100 firms, then, accounted for 3.84 new home deliveries last year, with average annual revenue accountability of just shy of $1.5 million.
That’s a 15% differential in the annual revenue per employee metric between 2006 and 2016. The delta is even greater when you compare last year with 2011, which nudged off the very bottom of the market among BUILDER’s top firms. That year, each of the 200 organizations’ 44,311 employee associates accreted to average closings of 3.53 homes and an annual revenue per employee average of $1 million.
So, the difference in annual revenue per employee in 2016 vs. 2011 is 50%. For context, consider that the U.S. economy created 2 million new jobs in 2016. The National Association of Home Builders tells us that every 100 new single-family homes produces lateral economic impact locally of $23.7 million in local income, $3.6 million in taxes and other revenue for local governments, and 394 jobs. Put those data inputs into our Builder 100/Next 100 2016 totals, and you get $85.2 billion in new local income, $10.7 billion in local taxes and revenue for localities that wasn’t there before, and 1.2 million permanent new jobs.
By those calculations, more than half of 2016’s new employment headcount additions in the United States track directly or indirectly to new residential construction.
And, by the way, that compares with $72.9 billion in local income, $915 million in local taxes, and 1 million jobs, based on our Builder 100/Next 100 totals of 254,044 homes delivered in 2015. That’s growth, year-on-year, of 17% in new household income, 19% in new 2016 local tax growth, and 20% in headcount growth.
Measured differently, Builder 100/Next 100 companies 10 years ago delivered 540,100 new homes, some 32% of all new single-family starts that year (1.7 million single-family starts). In 2016, our Builder 100/Next 100 companies delivered 38.5% of all 2016 single-family starts (771,000). While the national starts figure stepped up a modest 8% from 2015 to 2016, our Builder 100/Next 100 group achieved a growth rate double that, 16.9%.
So, don’t let anybody tell you home builders are not making progress on the productivity or doing “more with less” front.
This data affirms the fact that management and leadership in the trenches, among the divisions, right down to the supervisors and community managers at the project and neighborhood level, has taken strides in the past several years.
Wasted time, wasted effort, wasted material, and wasted money are still the nemeses that cloud ever more productive, growth-fueled, and profitable futures. Now–these “good times”–is the moment to seize on the momentum, not only in market demand but in your teams’ respective capacity and proficiency in meeting that demand, and try new things. Build, measure, learn.
That’s what we’ll focus on in our 2017 Housing Leadership Summit, coming up next week at the Ritz Carlton Laguna Niguel, in Dana Point. We’re expecting 300-plus high-level executives of the home building and building materials business community to join with us for a couple of days figuring out how their organizations can continue to push the “more with less” envelope, to solve for home buildings three chronic plaguing issues: affordability, labor capacity constraint, and technology-enabled new business models.
Meanwhile, a heartfelt salute to the ladies and gentlemen, and others, who can take credit for great strides of progress in high volume home building in 2016.