Concentration Values Most of the growth in concentration of big builders has occurred in the top 100, but looking at the top 100 builders by region reveals that the traditional hotbeds for home buildingâ€”the South and the Westâ€”favor concentration much more than the Midwest and the Northeast. Even so, all regions are showing the big builders are gaining share.
As the new-home market was still declining in 2009 to 2011, an important sea change occurred, setting in motion a trend that is not showing signs of abating. The nation’s largest builders began to take market share from what has traditionally been an extremely fragmented industry. In 2009, the top 10 builders in the country were responsible for 21 percent of the new homes closed. With data on closings complete through September, it looks as though 2012 will end with the top 10 builders controlling 26 percent of the market. And within the top 100 builders, the growth in market share is even more remarkable. In 2009, the top 100 were responsible for 39 percent of the market. As of press time, the 2012 share has risen to 49 percent and is very close to crossing the 50 percent threshold.
While comprehensive data on closings is limited to the years charted here, based on the very first Builder survey in 1984, the top 10 builders were then responsible for just 5 percent of the market. That has changed almost fivefold since.
As larger builders benefit from economies of scale, access to capital, and consumer brand reach, expect this trend to continue for the next few years.