Should you take new construction work from builders?

The short answer

Builder work is a good fit when you have idle crew capacity, a strong install team that is separate from service, and enough cash to wait for draws. It is a poor fit when your service phones are already full in peak season, because the builder will want your crew on the same hot July week your service customers do. The rest of this guide is a way to check which side of that line you are on.

Service and new construction side by side

Read the housing market before you sign

Builder demand moves with housing starts. In September 2026, US single-family starts ran at a seasonally adjusted annual rate of 859,000^[1], and total starts of 1,221,000 were 7.4% below September 2025^[2]. National numbers hide big local differences, so check permits in your county as well, but a falling trend means builders will squeeze trade bids harder and slow payments when closings slip.

The labor side matters as much as demand. Construction job openings were 289,000 in September 2026, up from 194,000 a year earlier^[3]. Builders short of trades often lean on the contractors they already use, which can be an opening for you, but it also means competitors may try to hire your installers.

Five numbers to run first

1. Crew hours per house by plan type, from a takeoff and your install history, including the rough-in, trim and final visits.
2. Gross margin per house after materials, labor and permit fees, compared with your average service or replacement margin per crew day.
3. Days of cash you will carry: materials bought at rough-in, paid at a later draw. Multiply by the number of houses open at once.
4. Callback rate: warranty visits and punch-list returns you will not be paid for. Use your own warranty history; if you have none, track it from the first house and reprice after ten.
5. Share of total crew hours: if one builder would take more than a third of your install capacity, you are taking on concentration risk.

Example: capacity math for a 12-person HVAC company

Example (fictional): a company with two install crews and six service techs is offered 40 houses a year by a regional builder. Each house takes about 2.5 crew days across rough-in, set and trim. That is 100 crew days, roughly 20 weeks of one crew.

Example: in spring and autumn, the second install crew was idle for about 60 days a year, so the builder work fills that gap profitably. In June through August, the same crew was booked on replacements with higher margins. The owner accepted the account on two conditions: builder rough-ins scheduled with two weeks' notice, and no more than one house in trim at a time during peak cooling season. The builder agreed to the first and negotiated the second to two houses.

Terms to get in writing

• Draw schedule by phase: what percentage is paid at rough-in, at set and at final, and how many days after invoice.
• Change orders: any change to the plan or equipment is priced in writing before work starts.
• Trip charges for return visits caused by other trades, such as a drywaller covering a register boot.
• Scheduling notice: minimum days between the call and the required start date.
• Warranty start date: closing date versus completion of your work, and who handles homeowner warranty calls.
• Materials price clause: when equipment prices rise between bid and install, how the difference is shared.
• Lien rights and lien waivers: understand your state's rules and deadlines before the first draw.

Licensing and code rules still apply on every house. Most US states require electricians to be licensed^[4], and some states and localities require HVAC technicians to be licensed^[5]; make sure your permit and inspection costs are in the bid, not absorbed.

Protect your service business

The biggest hidden cost of builder work is what it does to your phones and your reputation with homeowners. When install crews are pulled onto a builder deadline, service calls wait. Decide in advance which crews and which days belong to new construction, and keep service capacity sacred in your peak season.

Builder houses can also feed service later. Leave a branded sticker on the equipment, register warranties in the homeowner's name and include a welcome card with your service number. When the homeowner calls in year two, make sure the call is answered and booked; a missed call there wastes the one benefit that makes thin builder margins worthwhile.

A script for the first builder meeting

1. 01

   Ask about volume and timing

   How many starts do you have planned in the next 12 months, and how are they spread by month?

2. 02

   Ask about payment

   What is your draw schedule for our trade, and how many days after invoice do you usually pay?

3. 03

   Ask about scheduling

   How much notice do you give before rough-in, and what happens when another trade delays us?

4. 04

   Ask about the current contractor

   Why are you looking for another contractor now? The answer tells you whether the problem is price, quality or capacity.

5. 05

   State your limits

   We can take a set number of houses a month during the summer peak. Outside that, we can take more.

How the fit differs by trade

Builder work looks different in each trade, and the right answer for an electrician is not always the right answer for a roofer or a cleaning company.

• HVAC: equipment-heavy, with rough-in, set and trim visits spread over weeks. Cash tied up in equipment is the main risk. Labor is tight too: employment of HVAC mechanics and installers is projected to grow 11% from 2025 to 2035^[6], so every crew day you give a builder is hard to replace.
• Electrical: rough, trim and service connection, each with an inspection. Employment of electricians is projected to grow 9% over the same decade^[7]. Failed inspections caused by other trades are a common source of unpaid return trips, so price them.
• Roofing: usually one or two visits per house and fast to complete, which suits smaller crews. Most roofing contractors are small, with 65.3% of establishments having fewer than five employees in 2023^[8], so one large builder can dominate the calendar quickly.
• Cleaning: post-construction cleans before closing are a natural builder product, and they need little capital. The risk is tight closing deadlines and repeat visits after punch-list work.
• Landscaping: sod, irrigation and planting at closing. Payment is often the last draw, so check the builder's closing pace before committing crews.

Whatever the trade, ask other subcontractors who already work for the builder how quickly they are paid. Their answer is worth more than anything said in the sales meeting.

When to walk away

• The builder wants your price to match a competitor before seeing your scope.
• Payment is promised only at closing, with no phase draws.
• There is no written change-order process.
• The account would exceed half of your install capacity in its first year.
• You would need to hire installers you cannot find in a tight labor market.

If the answer is no for now, keep the relationship warm. Builders change trades often, and a contractor who said no politely, with clear reasons, is often the first call when the incumbent fails. Other ways to grow without builder risk include commercial maintenance contracts and property manager accounts.