BREAKING AWAY: D.R. Horton once again topped the list of detached builders. In 2005, it built 10,046 more detached homes than No. 2 Lennar, an increase from 2004, when it built about 6,000 more than No. 2 Pulte.
TRENDING UP: The top 10 attached builders constructed 14,220 more units in 2005 than the top 10 did in 2004, led by Pulte, which solidified its No. 1 position ahead of Lennar.
CONDO MANIA: Lennar leads other condo builders by a large margin, but other BUILDER 100 companies found success in the niche during 2005 as well. Wood Partners' increase in for-sale units propelled it back onto the list this year.
On the Margin Builders are anticipating margin declines in 2006 as the housing market's so-called soft landing arrives, but for many, 2005 was another year of increasing margins: 58 percent of respondents increased their gross margins last year, and nearly three-quarters made gross margins of 21 percent to 30 percent. Thirteen builders reported net margins in excess of 18 percent, compared with 10 builders last year.
Follow the Money BUILDER 100 members owned 60 percent of their land supply last year, a decrease from 66 percent a year earlier. It appears that the largest builders plan to spend less capital on land during 2006, as many of the public builders have announced share repurchase plans worth billions of dollars, designed to shore up stock prices and earnings per share. UBS analyst Margaret Whelan sees the strategy as a positive, calling the builders “disciplined,” but Steven Friedman, America's leader for Ernst & Young's home building practice, says it's not always the best use of available capital. “It makes your financial metrics much better when business is good, but it takes away some of the cushion you have in a downturn,” he says.
There's no doubt that the public home builders loom largest over the BUILDER 100—14 of the top 15 companies are publicly held—but their privately held peers made slightly better gains during 2005, outpacing the publics in both closings and revenue growth. Of course, the privates still have quite a way to go to catch up: The average public company built 11,898 more homes than the average private did last year.