As 2025 approached, the outlook for the housing market was characterized by uncertainty. Although the broader economic conditions remained relatively stable, changes in consumer confidence, along with concerns about the labor market and federal policy, started to affect potential home buyers.
Projections for the new home market in 2025 have been cautious. The NAHB is projecting only 0.2% growth for single-family starts in 2025.
The outlook for builders varies. Some are projecting strong growth, while others are forecasting a calendar year in line with 2024. Saun Sullivan, CEO of DSLD Homes, succinctly captures the mixed sentiments by describing the outlook for the industry in 2025 as “uncertain, like always.”
Impression Homes, focused on the first-time buyer segment, says 2025 has begun “worse than we anticipated,” with a slow end to 2024 extending into January.
In contrast, Meridian, Idaho–based CBH Homes reports a strong start to 2025. With interest rates that “feel more normal to buyers,” CBH Homes is experiencing healthy traffic and sales levels.
Zonda chief economist Ali Wolf says it remains difficult to make blanket statements about the 2025 housing market. There are pockets of strength in metros, submarkets, and price points. While affordability concerns and job uncertainty are affecting buyers in the lower end of the market, higher price points remain resilient.
“Our higher-end home market—$1 million plus—is still very strong,” says Tom McCall, chief operating officer of Daytona Beach, Florida–based ICI Homes. “We are still achieving our business plan objectives largely because of the ability to customize homes in production mode. That allows us to offer custom, personalized homes at marginally higher prices than standard production homes.”
Melbourne, Florida–based Holiday Builders operates in the entry-level and first move-up product categories and notes that sales incentives, such as rate buydowns, remain important for its customers.
“We need to see the interest rates come down at the end of the year. This will help wean the buyer off the buydown money and incentives,” says Richard Brown, president of home building operations at Holiday Builders. “The buyer has become used to the artificially lowered rates with the buydown money.”
Though builders share differing outlooks based on product mix and geography, most agree government policy will significantly shape the housing market this year.
Mary Mead, vice president of sales and marketing at McKinley Homes, says builders are beginning to prepare for the impact of proposed tariffs, which could lead to increased costs for building materials. David Weekley Homes CEO Jay Brown agrees, mentioning that navigating potential tariffs is the most significant development to shape the industry in 2025. In addition, Tom Hall, president of Windsor Homes, and Jed Nilson, president and CEO of Nilson Homes, say they believe uncertainty surrounding government policy could also influence demand throughout the year.
“Government policy will cause some uncertainty for both builders and buyers. I would like to see policy get more defined and consistent as it indirectly could affect the housing market more than it should,” Hall says.
Southlake, Texas–based Impression Homes president Steve Garza adds tariffs, along with immigration enforcement and tax cuts, could have inflationary impacts and cause mortgage rates to rise, exacerbating affordability concerns.
Affordability
With interest rates unlikely to dip below 6% in 2025, affordability as well as creative builder solutions to solve that equation remain crucial.
As buyers become more cost-conscious, Perry Homes CEO Todd Chachere notes many buying decisions are more prolonged as shoppers are “more selective, diligent, and thoughtful in their decisions.”
Mead adds customers are increasingly leading conversations with cost inquiries, with even a 1% change making the difference between qualifying and stretching beyond the budget.
For builders in the entry-level market segment, including Holiday Builders and Impression Homes, affordability is everything.
“We are a first-time home builder. Price and mortgage payments are the name of the game,” says Holiday Builders’ Brown. “We pivoted three years ago and created the Inspire series, which consists of small square footage, one-car garages, and no options. It’s strictly a speculative program.”
Dylan Gerard, chief financial officer of Manuel Builders, and Windsor Homes’ Hall share the same sentiment as Brown, as both companies have shifted to smaller homes and stripped-back options for buyers.
“We’re focused on keeping prices down by offering simple, streamlined options, smart floor plans, and strong lender partnerships,” adds Corey Barton, president and owner of CBH Homes. “We’re continuing buydowns and creative incentives to make it all work for the buyer.”
As builders scale back options and build smaller homes, Tim McMahon, CEO of Fischer Homes, says it is important to maintain product and customer experience differentiation.
“If you are building a commodity home, then you can only compete on price,” McMahon says. “If your company is committed to making sure your homes and communities are designed and maintained better than your competition’s and your organization is committed to the customer experience, then you now have a unique value proposition to build your business around.”
Drees Homes continues to offer below-market, fixed-rate promotions and 2-1 buydowns for buyers. It also has introduced its Pure Style series, providing buyers with simpler builds while maintaining the traditional Drees style.
Houston-based David Weekley is also focusing on affordability and serving cost-sensitive buyers.
“To better scale our impact and reach more families, we’re bifurcating the product set and launching a new standalone company, Imagination Homes, focused exclusively on entry-level homes,” notes Brown.
In Utah, Nilson Homes has built the first community of starter homes under the governor’s initiative to produce 35,000 of these residences in the state over the next five years. Nilson says he believes smaller lot sizes, smaller homes, and creative solutions being deployed on starter homes in the state could shape trends beyond Utah.
“We are addressing affordability by providing options with much smaller floor plans, as small as 1,100 square feet and one-car garages,” Nilson says. “We are also building homes with internal ADUs to provide lower payments.”
Market Consolidation
The pace of M&A activity remained accelerated in 2024 and has continued through the beginning of 2025.
The landmark deal of 2024 was the Sekisui House-M.D.C. Holdings merger, which propelled the Japanese company to the No. 6 spot on the 2025 Builder 100 list. Sekisui’s U.S. portfolio also includes Woodside Homes, Holt Homes, Chesmar Homes, and Hubble Homes.
The U.S.-based subsidiaries of Daiwa House—No. 21 Stanley Martin Homes, No. 49 CastleRock Communities, and No. 67 Trumark Homes—and Sumitomo Forestry—No. 20 DRB Group, No. 29 Brightland Homes, No. 41 Bloomfield Homes, No. 54 Edge Homes, and No. 138 MainVue Homes—are presented as individual listings on the 2025 list.
Additionally in 2024, public builders Lennar, Meritage Homes, Taylor Morrison, Century Communities, Dream Finders Homes, Landsea Homes, United Homes Group all completed M&A deals. Daiwa House–backed CastleRock Communities and Stanley Martin and Sumitomo Forestry–backed DRB Group also grew through M&A last year.
The factors supporting M&A activity include well-capitalized public builders, high valuations for selling regional private builders, and interest from international buyers. These dynamics are being further supported by a growing number of private builders looking to grow through M&A. Private builders Perry Homes, Drees Homes, Empire Communities, Davidson Homes, and McKinley Homes all completed acquisitions in late 2024 and early 2025.
This wave of M&A activity has accelerated market consolidation in the home building industry. Taking 2024 closings of the Builder 100 and Next 100 companies into consideration, the top 20 builders accounted for 70.8% of total closings last year. This calculation includes No. 19 Rausch Coleman, which was acquired by No. 2 Lennar in December 2024, and has the closings of the U.S.-based subsidiaries of Sumitomo Forestry, Daiwa House, and Misawa House listed separately.
Builders are using M&A as a tool to enter highly attractive housing markets to bolster their portfolio. For example, Dream Finders Homes acquired Liberty Communities to enter Atlanta, while Drees Homes acquired Monticello Homes to enter the San Antonio market.
Builders are also targeting secondary and tertiary markets through M&A. Since the top builders in any given major metro possess between 70% and 90% market share, acquiring a smaller builder in such markets is unlikely to yield as significant market share gains as expanding into new secondary and tertiary markets.
Lennar’s acquisition of Rausch Coleman expanded the public builder’s portfolio into new markets in Arkansas, Kansas, Missouri, and Oklahoma. Similarly, Meritage Homes’ acquisition of Elliott Homes added a Gulf Coast presence for the company in markets in Alabama, the Florida panhandle, and Mississippi.
“The margins that you can achieve and the accessibility to land in these markets is far better,” Builder Advisor Group founder and CEO Tony Avila says in highlighting the attractiveness of using M&A to enter secondary and tertiary markets. “You get better margins, better growth, you can grow faster on a percentage basis, and you’ve got good access to land and labor supply.”
Land
Throughout 2024, builders observed the land market became increasingly competitive, aggressive, and expensive. Zonda’s most recent New Home Lot Supply Index indicates the overall land market remains “significantly undersupplied,” as it has been since 2017.
Garza says Impression Homes is approaching the land market with caution, slowing its acquisition activity despite having sufficient capital. Windsor Homes’ Hall notes sewer service and municipal/government regulations are “a huge impediment and cost adder” in the land market.
Despite these challenges, many public builders have expressed intentions to grow market share, community count, and closing volumes, even in the tight land market.
Meritage Homes laid out goals of closing 20,000 units by 2027, while Taylor Morrison has a goal of opening more than 600 communities and closing 20,000 homes by 2028. Lennar projects growth in annual closings to between 86,000 and 88,000 in 2025. Each builder shares they have a sufficient lot pipeline.
Smaller builders are also bullish on the market and targeting growth in 2025.
Brown says Holiday Builders has ramped up its land purchase activity, looking to double its lot control and to grow its active community count by 10.
Jake Eilermann, CEO of McBride Homes, says he believes many builders are focused on reloading lots in 2025 to prepare for a stronger housing market in 2026.
“Builders are prioritizing land positions, securing future communities, and refining their product offerings to align with evolving buyer preferences,” Eilermann says. “McBride Homes is taking an aggressive approach to land acquisition and development in 2025. As we gear up for a strong 2026, securing prime locations and expanding our lot inventory is a top priority.”
Andy Seitz, chief financial officer of Drees Homes, says the company is approaching the land market similarly to the past couple years, though he notes the market is “very competitive,” making “acquisition more difficult.”
Chachere says Perry Homes continues to employ an “opportunistic” land strategy in the challenging market environment, while Brown says David Weekley is increasing the amount of land the company owns and controls while looking for self-development opportunities on its own properties.
McMahon notes Fischer Homes’ focus on population growth, jobs, and income level forecasts takes “much of the guesswork” out of its growth trajectory.
“While there may be some uncertainty, we are confident prime locations will continue to perform and are prioritizing these in each of the metro areas where we compete,” McMahon says.
