Where Are the Economies of Scale in Homebuilding?
The construction industry faces significant challenges in improving productivity and reducing costs, particularly in homebuilding. Despite the large volume of homes built in the U.S., economies of scale in this sector remain modest due to the nature of the production process and the fragmented market. The concentration of firms in homebuilding is relatively low, which further limits the potential for achieving substantial cost savings through scale.
- ▪Construction productivity in the U.S. has not improved significantly compared to other industries.
- ▪Homebuilding in the U.S. involves over 1.3 million housing starts annually, yet economies of scale are limited.
- ▪The homebuilding market is fragmented, with over 65,000 firms and the top 100 firms controlling less than 50% of the market.
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| Original publisher | Hacker News (Newest) |
| Canonical URL | https://www.construction-physics.com/p/where-are-the-economies-of-scale |
| Publication time | Fri, 29 May 2026 00:16:20 +0000 |
| Retrieval time | 2026-05-29T00:29:38.907Z |
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Where Are the Economies of Scale in Homebuilding?Brian PotterMay 28, 2026100148ShareOver the last few months we’ve examined the extent of the construction industry’s productivity problem. We’ve looked at a variety of construction productivity metrics, both for the US and for countries around the world, and found that construction productivity almost always rises much less in construction than it does in industries like manufacturing; often, it doesn’t improve at all. We’ve analyzed trends in construction costs in the US and around the world, and noted that construction almost never gets any cheaper: construction costs almost always rise at or above the level of overall inflation.
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