By Roberta Maynard. According to Chinese tradition, 2003 will be the year of the sheep. In the home building business, it will more closely resemble the year of the tiger. Hungry for market share — and determined to get it — the biggest public companies will be on the prowl for growth opportunities. As their plans unfold next year, we can expect to see a fair amount of merger activity along with significant organic growth.

The fact that the housing market will contract by about 2.5 percent doesn't appear to be an issue. Or that some key markets — Phoenix, Houston, Tampa, Chicago — will see permits drop by that much and more. Dallas, for example, is likely to lose about 5 percent of its 2002 volume. Those trends may worry some, but the big builder CEOs aren't among the nail-biters. Far from it. The industry's dozen largest players expect to produce more, more, more. That's good news for suppliers to building companies. It's not so good for smaller builders competing with these giants.

D.R. Horton's Don Tomnitz, for instance, has charged his 52 division presidents with delivering a 20 percent increase in pretax income next year. He's raised the bar on market share, too. Tomnitz wants all of his divisions to be among the top five in their markets. From those who already dominate, he wants double-digit market share. Horton aims to build 35,000 homes next year (remember when no one thought that volume was possible?) — that's 28 times as many homes as the company built 10 years ago.

Giant Steps (units produced)





9,634 31,500
Pulte 8,028 38,000
Ryland 7,989 13,000
NVR 4,228 11,000
KB Home 3,944 25,000


3,039 31,000
Hovnanian 2,636 9,500
M.D.C. 2,414 8,800
D.R. Horton 1,231 35,000
Beazer 1,206 16,500
Totals: 44,349 219,300

Centex, too, is going after the only U.S. market cluster it hasn't tapped: the Midwest. After St. Louis, which Centex entered earlier this year by purchasing The Jones Company, nine other markets in the region are potential targets. Centex and others — notably Hovnanian and Lennar — will have an eye out for acquisition opportunities. Add 20 percent to the 2002 totals in the chart to the left — roughly the amount each builder plans to grow — and you see what happens: 263,160 out of an estimated 1.3 million single-family starts next year.

Photo: Katherine Lambert

It's no surprise, but it bears repeating: Heading into the new year, the mega builders have mega resources. They have competitive drive, a steady fixation on efficiency, cash on hand, and growing purchasing clout -- not to mention a little help from demographics. Need we say more?

Roberta Maynard



Published in BIG BUILDER Magazine, December 2002