It’s a good time to be in residential construction.

A recent report by Sageworks, a financial information company, ranks residential building construction as the ninth-fastest-growing industry for small businesses.

Residential construction is one of the most lucrative industries for small businesses.
Residential construction is one of the most lucrative industries for small businesses.

According to the report, which considers small businesses to be “privately-held companies with annual sales less than $5 million,” the sector had a 12.8 percent year-over-year growth rate among that demographic.

“Privately held companies of all sizes over the last 12 months have seen sales growth, on average, of about 10 percent,” writes Mary Biery, a Forbes contributor. “Construction spending has been climbing this year, and unemployment in the sector is so low (lowest level since 2006) that wage pressure and labor shortages are growing.”

DWM’s June/July issue profiled some of the fastest-growing door and window dealers, which make up part of the fast-growing residential construction sector. The average growth rate of business profiled was 48 percent. To see how they did it, click here.

The full Sageworks report breaks down specifics even further:

Financial Metric 2013 2014 Percent Change
Gross Profit Margin 29.0% 28.6% -1.4%
Sales per Employee $290,393 $314,372 8.3%
Profit per Employee $17,005 $19,104 12.3%

 

According to the U.S. Department of Commerce, construction spending is at its highest level since May 2008.

Five of the top 10 fastest-growing industries were construction-related, but the fastest-growing industry was freight trucking, which has seen an uptick thanks to low oil prices.

Have you seen similar trends in your business? Leave a comment below.

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