In 2012, for the first time ever, the top 100 builders in the country accounted for about 50% of all new home closings (see chart). Even more surprising is this: the top 10 builders alone accounted for almost 30% of new home closings nationwide. (In Tucson they accounted for a whopping 77%!)
Yes, that kind of concentrated market power is unprecedented. But, given the big builders' access to capital, their strong land positions and their purchasing power with building product manufacturers, many housing analysts expected them to flex their muscles coming out of the Great Recession, particularly in the major housing markets.
The news is actually worse than even this for small builders. According to MetroStudy, Hanley Wood's housing data and analytics arm, a small number of builders control the majority of new home closing not only in the big housing markets but in almost every county of any size in the United States. In fact, in every one of those counties the 10 biggest builders building there account for more than 50% of new home closings. In these smaller markets, the 10 biggest builders are, for the most part, not the big national or regional players. They're simply the biggest local builders, and they're decidedly bigger than the small builders struggling to survive in those markets.
So, in markets big and small, small builders are at a competitive disadvantage which will make it harder than ever for them to benefit from the housing recovery.