Last year was an amazing year for home builders in the country's top 50 metropolitan areas. As they have for the past four years, these markets and the largest 10 builders within them captured a majority of the nation's new-home sales, accounting for more than 744,000 closings in 2003.
Big And Bigger Public builders are making great strides to dominate the major metropolitan areas. Six builders ranked in the top 10 in at least 19 markets, up from three in 2001. Of those, Centex (34) and D.R. Horton (32) earned top 10 positions in more than 30 markets, with Pulte right behind with 31 top 10 placements.
Market Dominators Consistent with the last three years, KB Home and D.R. Horton earned the greatest dominance in a single market.
D.R. Horton garnered a 29.9 percent share in Austin, Texas, with 2,392 closings, while KB grabbed 22.5 percent of the Tucson, Ariz., market with 1,427 closings. The two companies were virtually deadlocked at slightly more than a 20 percent market share in the former KB stronghold of San Antonio.
Six builders topped 3,000 closings in a single market in 2003, and two—D.R. Horton and Pulte —broke 4,000 in the same market, Phoenix, which was the second biggest housing market in the country last year.
Growth Strategies Builders continue to grow organically, but the fastest way to expand is still through acquisition.
According to Credit Suisse First Boston, the 10 largest public home builders made 33 acquisitions in 2002 and 2003. The organic growth is starting to focus on the “smaller” markets (typically less than 7,000 units annually) with Florida and the Southeast garnering a great deal of attention.
The opportunity to build 300 to 500 units in a less competitive region that earns a 4 percent to 7 percent market share is becoming very attractive, compared with attempting a similar capture in a major market. In those markets, builders compete against the public builders, and land supply can actually be tighter, more expensive, and harder to entitle.
Local Angles The country's largest builders are all over the top 10 lists, but several locally based builders compete effectively with the publics.
Bowen Builders Group secured fifth place in Atlanta, the nation's largest housing market last year, while in Phoenix, Fulton Homes and Trend Homes have cemented their places.
Perry Homes in Houston, Neumann Homes in Chicago, and The Villages of Lake-Sumter in Orlando, Fla., are just a few of the local builders that close as many homes as their larger competitors. —Tim Sullivan, Meyers Group
Tim Sullivan is the principal in charge of the Real Estate Consulting Services at Meyers Group.
Learn more about markets featured in this article: Phoenix, AZ.