No need to worry about your local home builder’s profit margin — they’re actually rising. CoConstruct, who provides construction project management software to over 100,000 clients, took a dive into builder margins. Analyzing client data, they found home builder profit margins climbed in Canada and the US. Despite rising material costs, buyers have been willing to absorb the increase.
US Home Builders Have Seen Consistent Profit Growth
Breaking it down, both American and Canadian home builders have seen improvements. In the US, the average margin was healthy in 2019 (14.4%) but climbed in 2020 (14.6%) and in 2021 (14.9%). American home builders didn’t even break stride through the recession.
Canadian Home Builders Have Also Seen Profits Climb
In Canada, the increases weren’t quite as smooth as in the US. The average builder margin in 2019 (12.9%) was higher than in 2020 (12.5%), as a brief market cooldown paused demand. The average profit made up for the margin compression by climbing to 13.2% in 2021.
“The consistent and increasing year-over-year growth highlights, among other things, the resiliency of the residential construction industry,” explained CoConstruct.
Canada’s profits are smaller as a share of the sale price of a home compared to the US. But homes also cost about 85% more in Canada after the exchange rate, so no need to shed a tear about the lost margins. They appear to still be quite lucrative for home builders north of the 49th.