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 at the Forefront of Residential Construction
Independent contractors play a major role in the residential construction industry, making up nearly 80% of home builders and specialty trade contractor firms. According to an analysis based on the 2022 Economic Census and Nonemployer Statistics data, the landscape of residential building construction (RBC) reveals a significant reliance on these self-employed individuals.
In looking at operational scale, it appears that a significant number of independent contractors are generating less than one million dollars in total business receipts. Specifically, 63% of homebuilders and two out of three specialty trade contractors fall into this income bracket. There are currently over 813,000 nonemployer firms in the RBC sector, which represents almost 80% of all establishments within this field.
Specialization and Income Levels
When breaking down the statistics even further, the analysis shows that in the land subdivision area, more than 9,000 independent contractors account for 68% of firms in that segment. Meanwhile, specialty trade independent contractors are particularly numerous, with over 1.9 million making up 79% of all specialty trade contractor (STC) establishments.
The economic contribution of these independent contractors is noteworthy. In terms of revenue, self-employed individuals in residential building construction report average annual receipts below $103,000. In contrast, specialty trade contractors fare even lower, with average receipts at under $70,000. Land subdivision contractors, however, report higher averages, approximately $288,000 annually.
Distribution of Revenue and Sales
While independent contractors dominate the establishment count, their overall contribution to sales is relatively modest. Nonemployer firms constitute only 12% of total sales and receipts from residential building construction and land subdivision combined. They also represent 9% of revenues generated by specialty trade contractors.
Examining establishments with paid employees shows that a substantial number fall below the million-dollar threshold. About 75% of remodeling establishments, 63% of land developers, and 59% of STC companies report earnings under $1 million.
Size Standards and Market Status
Despite the prevalence of independent contractors, most residential construction firms can be classified as small businesses according to U.S. Small Business Administration (SBA) size standards. Currently, the SBA size limits stand at $45 million for builders, $34 million for land subdivision, and $19 million for specialty trade contractors. Most remodelers and single-family contractors qualify as small businesses, alongside at least 98% of land developers and 96% of specialty trade contractors.
Interestingly, there is a small percentage of multifamily contractors who report much higher earnings. Approximately 10% of multifamily contractors indicate annual sales ranging from $10 million to $25 million. Even larger revenues are reported amongst 11% of multifamily contractors, who earn between $25 million and $100 million in 2022.
Conclusion
The data presents a nuanced picture of the residential construction industry. While independent contractors are essential players, generating a large number of establishments and jobs, their contribution to overall revenue is limited, especially compared to firms with paid employees. Understanding this dynamic is crucial for stakeholders in the industry, as it reflects ongoing trends in small business performance, economic contributions, and the overall health of the residential construction market.
FAQ
Q: What percentage of home builders are independent contractors?
A: Nearly 80% of home builders are self-employed independent contractors.
Q: How much does the average independent contractor in residential building construction earn?
A: Independent contractors in residential building construction earn average annual receipts below $103,000.
Q: What constitutes a small business in the construction industry according to SBA standards?
A: Most construction firms qualify as small businesses under the SBA standards, with specific revenue caps such as $45 million for builders and $19 million for specialty trade contractors.
Q: What is the revenue generation of multifamily contractors?
A: Approximately 10% of multifamily contractors report annual sales between $10 million and $25 million, while 11% earn between $25 million and $100 million.
Key Features of the Independent Contractor Landscape in Residential Construction
| Feature | Statistic |
|---|---|
| Independent Contractors as Home Builders | 80% |
| Nonemployer Firms in RBC | Over 813,000 |
| Average Earnings of Residential Contractors | Under $103,000 |
| Small Business Qualification | Most Firms |
| Revenue Generation from Multifamily Contractors | 10% report $10 million to $25 million |
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 NY News
NEW YORK STAFF WRITER The NEW YORK STAFF WRITER represents the experienced team at constructionnynews.com, your go-to source for actionable local news and information in New York 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 New York Build Expo, infrastructure breakthroughs, and cutting-edge construction technology showcases. Our coverage extends to key organizations like the Associated General Contractors of New York State and the Building Trades Employers' Association, plus leading businesses in construction and real estate that power the local economy such as Turner Construction Company and CMiC Global. As part of the broader network, including constructioncanews.com, constructiontxnews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic construction landscape across multiple states.
