Residential Construction: Average Net Profit After Taxes Equals 9.4%

Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!

Residential Construction

The residential construction industry’s average net profit after taxes equals 9.4% during 2019. The top four companies in the United States built and sold 151,366 homes during 2019 with an average sales price of $376,703. Each home netted after income taxes $35,464 of profit. This equates to an average net profit of 9.4% in the residential construction industry. 

This research ties to the following summary schedule from the publicly available financial statements and annual reports:

Name of Company      2019 Closings       2019 Sales      2019 Net Profit      2019 Average Net Profi
D.R. Horton                       56,975              $17.593B             $1.618B                           9.09%
Lennar Corp                       51,491              $22.26B               $1.85B                             8.31%
Pulte Group                        23,232              $9.916B               $1.02B                           10.25%
NVR                                   19,668              $7.245B               $880M                           12.11%

This website has many articles within the Construction Industry standards section explaining the respective margins, mark-ups and expected net profits for the various residential contractors including new home, remodeling, restoration and trades. This site includes information pertaining to:

  • Estimating – proper methods, procedures and tricks;
  • Mark-up and Margin – learn and understand the difference and the best formula for your company;
  • Policies – policies that work and how to implement the corresponding procedures;
  • Accounting – provides best accounting systems and addresses methods used in the construction industry;
  • Job Costing – information about different tools and systems to record job costing;
  • Evaluation – learn how to evaluate results and implement lessons learned.

If you want additional information, go to the construction industry section of this website and read the material that best aligns with your information request. Act on Knowledge.

Value Investing Episode 1 – Introduction and Membership Program