United States, August 28, 2025
News Summary
The residential construction sector is seeing a surge in independent contractors, with nearly 80% operating as self-employed entities. Recent data indicates that independent contractors play a vital role in managing and executing construction projects, significantly impacting the workforce and financial landscape of the industry. Despite their prevalence, many face challenges in terms of profitability and revenue generation. Understanding the dynamics of this shift can inform better support strategies for these small businesses in the construction sector.
Independent Contractors Steal the Spotlight in Residential Construction
The residential construction industry is increasingly dominated by independent contractors, with nearly 80% of home builders and specialty trade contractor firms operating as self-employed entities. This new data, sourced from the 2022 Economic Census and Nonemployer Statistics collected by the National Association of Home Builders, reveals significant insights concerning the state of construction in the United States.
Despite their overwhelming presence, these independent contractors often operate on modest revenues. The statistics show that around 63% of home builders, along with two out of three specialty trade contractors, generate less than $1 million in total business receipts annually. This trend underscores the challenges faced by small firms in navigating the competitive construction landscape.
Significance of Nonemployer Firms
In the segment of residential building construction (RBC), there are now over 813,000 nonemployer firms, highlighting their crucial role in the industry. These nonemployer firms make up close to 80% of all establishments in the RBC sector and also comprise a substantial share of full-time employees (FTE). In fact, nonemployer firms account for nearly 50% of FTEs in residential building construction, 26% in land subdivision, and 28% in specialty trade contracting.
While independent contractors are plentiful, the average annual receipts tell a different story. In RBC, self-employed independent contractors average under $103,000 in annual receipts, while specialty trade contractors are even lower, averaging under $70,000. On the other hand, independent contractors engaged in land subdivision report a considerably higher average, at approximately $288,000.
Revenue Distribution in the Sector
Despite their numbers, nonemployer firms account for only 12% of all sales and receipts from residential building construction and land subdivision combined. They also contribute to around 9% of specialty trade contractors’ revenue. This suggests that while independent contractors represent the vast majority of firms, they are not necessarily the major players when it comes to generating income in the industry.
Among residential construction businesses that have paid employees, a significant portion remains below the million-dollar benchmark in terms of income. Reports indicate that 75% of remodeling companies, 63% of land developers, and 59% of specialty trade contracting firms all generate less than $1 million in annual receipts.
Small Businesses Shine
Most players in the residential construction scene qualify as small businesses according to the U.S. Small Business Administration (SBA) size standards. These standards currently allow for $45 million in revenue for builders, $34 million for land subdivision, and $19 million for specialty trade contractors. The majority of remodelers and single-family contractors, alongside 98% of land developers and 96% of specialty trade contractors, fall under these classifications.
Interestingly, not all contractors see the same level of success; multifamily general contractors generally enjoy larger revenue streams. Roughly 10% of multifamily contractors reported annual sales in the range of $10 million to $25 million, while 11% reported earnings between $25 million and $100 million in 2022.
The residential construction industry is evolving, presenting both challenges and opportunities for independent contractors. Although they might represent the vast majority of firms, the earnings highlight the ongoing struggles many face in a competitive and dynamic market.
FAQ Section
What percentage of residential construction firms are independent contractors?
Nearly 80% of home builders and specialty trade contractor firms are self-employed independent contractors.
How much do independent contractors in residential construction generally earn?
Independent contractors in residential building construction have average annual receipts of under $103,000, whereas those in specialty trades earn under $70,000 on average.
Are most independent contractors small businesses?
Yes, most residential construction firms qualify as small businesses under the U.S. SBA size standards.
Key Features of the Article
| Feature | Detail |
|---|---|
| Percentage of Independent Contractors | 80% of home builders and specialty trade contractors |
| Average Annual Revenue for RBC Contractors | Under $103,000 |
| Number of Nonemployer Firms | Over 813,000 |
| Small Business Qualification | Most contractors qualify as small businesses |
| Revenue for Multifamily Contractors | 10% earn $10M – $25M; 11% earn $25M – $100M |
Deeper Dive: News & Info About This Topic
Additional Resources
- LBM Journal: Most Home Builders Are Small Businesses per NAHB
- Christian Science Monitor: Modular Construction and Housing Shortage
- Los Angeles Times: Tech Billionaire’s Affordable Housing Initiative
- AZ Central: Phoenix Construction Company’s Nonprofit Projects
- Encyclopedia Britannica: Construction
Author: Construction CA News
CALIFORNIA STAFF WRITER The CALIFORNIA STAFF WRITER represents the experienced team at constructioncanews.com, your go-to source for actionable local news and information in California and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Rose Parade, Coachella, Comic-Con, and the California State Fair. Our coverage extends to key organizations like the California Building Industry Association and Associated General Contractors of California, plus leading businesses in technology and entertainment that power the local economy such as Apple and Alphabet. As part of the broader network, including constructionnynews.com, constructiontxnews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic landscape across multiple states.
