An analysis of the latest Economic Census data by NAHB economist Natalia Siniavskaia 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% of total revenue of specialty trade contractors to 87% 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% of the total revenue.
For single-family general contractors, 7% 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% of total revenue on construction payroll.
In sharp contrast, multifamily general contractors who subcontract out most of the work, spend only 3% on the construction payroll. Their biggest expenditure is the cost of construction work subcontracted out to others, 63% of the total revenue. This far exceeds the typical spending by single-family general contractors on subcontractors, which amounts to 36% of outlays.