No need to worry about your local homebuilder’s profit margin – it’s actually growing. CoConstruc, which provides construction project management software to more than 100,000 customers, plunged in builder margins. By analyzing customer data, they found that homebuilder profit margins had increased in Canada and the United States. Despite rising material costs, buyers were willing to absorb the increase.
U.S. homebuilders have seen steady profit growth
Breaking down, US and Canadian homebuilders have seen improvements. In the US, the average margin was healthy in 2019 (14.4%) but climbed in 2020 (14.6%) and 2021 (14.9%). American homebuilders didn’t even take the plunge during the recession.
Canadian homebuilders also saw their profits soar
In Canada, increases have not been as steady as in the United States. The average builder margin in 2019 (12.9%) was higher than in 2020 (12.5%) as a brief market downturn halted demand. Average profit offset the squeeze on margins by climbing to 13.2% in 2021.
“The consistent and increasing year-over-year growth highlights, among other things, the resilience of the residential construction industry,” CoConstruct explained.
Canada’s profits are lower as a proportion of the sale price of a house compared to the United States. But houses also cost about 85% more in Canada after the exchange rate, so no need to shed a tear over lost margins. They seem to still be very lucrative for homebuilders north of 49th.