By Alison Rice. In yet another boom year, big builders best themselves again. Pulte Homes leads the 2002 pack in overall closings, building a total of 36,450 homes, 28,903 of them in the United States and 7,547 in other countries, according to fiscal-year filings. D.R. Horton, benefiting from nearly a year of Schuler Homes closings after their early 2002 merger, built fewer homes overall than Pulte, but more domestically, completing 31,584 deliveries in calendar 2002.
Two other builders are approaching the 30,000 mark: Lennar Corp., with 27,393 closings; and Centex Homes, with 28,297 domestic deliveries and 1,432 overseas in calendar 2002.
Even for big builders, those are giant numbers. Americans purchased a record 976,000 new homes last year, according to preliminary numbers released by the U.S. Census, which means these four companies alone captured nearly 12 percent of the new-home market in 2002.
Such trends are expected to continue. "One thing that makes us comfortable with these companies is that they have very strong balance sheets," says Joseph Sroka, a Merrill Lynch analyst in New York. "They're out there buying land, opening new communities, buying back their stock--they're doing things to grow their companies."
Many of the publics achieved big 2002 jumps through acquisitions. Beazer Homes, which merged with Crossmann Communities last year, delivered 13,603 homes in fiscal 2002, up 50 percent from 2001. K. Hovnanian Enterprises, which purchased The Forecast Group, saw its closings climb to 9,514 last year, a 42 percent increase.
Among the buy-minded builders, Lennar continues to be watched for its pattern of making deals that quickly prove accretive to earnings. "I think Lennar is in the best position of the top three [builders] to grow both top and bottom line" in 2003, says Jeff Meyers of The Meyers Group, who says Lennar has the best land position in the California market.
Non-acquisitive builders have also attracted attention. The Ryland Group, with 13,145 closings and $2.877 billion in revenue last year, has won investor praise for organic growth, conservative financial management, and shareholder value.
But top-line numbers aren't the only things that matter, reminds Sroka. "We're not so much interested in who builds the most homes as we are interested in who provides the best return on capital."