List Research by Loretta Williams.

Click here to see the 2006 BUILDER 100 list.

Click here to view the 2006 Next 100 list.

For the first time since 2002, the top three companies on the Builder 100 list traded places. While D.R. Horton remains on top, Lennar Corp. rode a 7,209-unit closings increase to become the new No. 2, and tightened the gap on the list leader to just 3,842 closings. Pulte Homes shifts back to third, after its closings declined 9.08 percent, with Centex Corp. and KB Home rounding out the top five.

D.R. Horton, with 53,410 closings, out-performed the entire combined Next 100 (numbers 101-200), which closed 44,824 units in 2006. And Horton, the biggest of the big builders, almost surpassed the combined closings for Builder 100 companies ranked 51 through 100, which together closed a total of 54,070 units.

With a tough 2006 in the bag, and a difficult 2007 ahead, the Builder 100 could see some shake ups this year. Merger and acquisition activity has been slow since the summer of 2005, with only Emaar Properties' May 2006 purchase of John Laing Homes as the exception. But with company and land values coming back to earth, merger and acquisition activity could pick up this year, leading to further shifts among the Builder 100. (At press time three large deals were in the works, with several more rumored to follow.)

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Rising To The Challenge

While BUILDER 100 companies' efforts to diversify across the country left some of them exposed to more faltering markets instead of insulating them against regional downturns, the same builders' access to capital, solid balance sheets, and the ability to lower prices once again allowed them to take market share from their smaller competitors.