Study: Profits Rising for Remodelers

May 3rd, 2017 by Trey Barrineau

Things are looking up for home-improvement professionals.

Remodelers made a net profit of 5.3 percent in 2015, up from 3 percent in 2011, according to a new study from the National Association of Home Builders (NAHB).

The Remodelers’ Cost of Doing Business Study: 2017 Edition finds that the average revenue for remodelers was $1.8 million in 2015. Of that total, about $1.3 million, or 71.1 percent, covered the cost of items such as labor and material. That left a gross profit of about $515,000, or 28.9 percent of revenue.

Remodelers also spent about $420,000 in operating expenses on average in 2015, ending the year with a net profit of around $95,000.

The future looks bright for the renovation market as the U.S. economy continues its steady recovery from the Great Recession.

Home remodeling and repair spending is expected to stay strong in 2017, according to the Leading Indicator of Remodeling Activity (LIRA), which was released in January by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects that spending levels will end the year up 6.7 percent at $317 billion, slightly lower than the 6.9 percent growth estimated for 2016.

Additionally, the 2017 Houzz State of the Industry report found that most home renovation and design businesses anticipate widespread revenue growth in 2017 than they experienced in 2016. Businesses expect their annual gross revenue to grow 10-12 percent on average, compared to 8-10 percent in 2016. The majority of firms also anticipate profit to grow in 2017 (69-76 percent).

And finally, HomeAdvisor’s 2017 True Cost Survey found that the average homeowner has spent nearly 60 percent more on home projects over the past 12 months than in the 12 months prior. They spent an average of roughly $1,850 more on home improvement projects.

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