The construction industry struggles with productivity gains unlike manufacturing. Despite building over 1.3 million housing units in the US annually, homebuilding shows limited economies of scale. The industry remains fragmented with over 65,000 firms, creating unusual market dynamics compared to concentrated sectors like aircraft manufacturing.

Large homebuilders demonstrate no meaningful cost advantages despite their size. Studies show larger builders actually had higher construction costs than smaller ones, with similar gross margins across the industry. The top four firms control just 18% of the market, far below levels seen in other industries.

Large builders like Lennar and D.R. Horton subcontract most construction work to local contractors, using the same basic methods as smaller builders. While volume discounts on materials provide modest savings, they don't translate to substantial cost reductions. The homebuilding industry maintains its traditional methods regardless of scale.