Mergers and acquisitions have happened at a record pace over the past two years and heightened foreign interest in the U.S. housing market means 2025 could be just as hot as foreign buyers look to stake a claim in the American market. Just look at 2024’s blockbuster deal—the $4.9 billion acquisition of M.D.C. Holdings by Sekisui House—a deal that represented the heightened interest in the U.S. market by Japanese buyers.
“[The M.D.C. Holdings acquisition] represents a significant advancement of our strategy to expand in the U.S. and bring the value of our philosophies and technology to U.S. home building,” Yoshihiro Nakai, representative director of the board president, executive officer, and CEO of Sekisui House, said at the time of the deal. “With M.D.C. joining our group, we believe that we can become a one-of-a-kind entity in the U.S. by combining Japanese and U.S. technologies.”
Asian buyers have acquired more than 30 U.S. builder or construction service companies since 2013.
The Sekisui-M.D.C. deal was also the most prominent illustration of the general market consolidation occurring due to the volume of M&A activity. Analysts estimate the largest 20 home building companies could control approximately 40% of the market. Taking the 2023 closings of the 200 Builder 100 and Next 100 companies, which has M.D.C. Holdings and Sekisui House listed separately, the top 20 builders accounted for 69% of total closings in 2023.
The race for market share is accelerating with many of the top U.S. public builders also acquiring private regional builders. In the past two years, public builders D.R. Horton, Lennar, Meritage Homes, Taylor Morrison, Century Communities, Dream Finders Homes, Smith Douglas Homes, Landsea Homes, and United Homes Group have all completed at least one acquisition, with many completing multiple deals to capture market share.
The Japanese companies, including Sekisui House, Daiwa House, Sumitomo Forestry, and Misawa Homes Co., have also embarked in the market share race in the United States with acquisitions in recent years to bolster their portfolios.
Stated goals shared by the Japanese companies suggest their appetite in the U.S. market will only accelerate in the coming years. Misawa Homes targeted approximately 35% annual growth in revenue in 2024 alone following its purchase of a 51% stake in Utah-based Visionary Homes. At the time of subsidiary DRB Group’s acquisition of Florida-based Biscayne Homes, Sumitomo Forestry reiterated its goal of selling 23,000 housing units in the United States annually by 2030. Daiwa House—which has U.S. hubs in the east, central, and west regions—has targeted supplying 10,000 single-family housing units in the United States by 2026.
Sekisui House’s approach has been guided by the company’s goal of achieving 10,000 annual U.S. closings by 2025; however, the acquisition of M.D.C. Holdings helped Sekisui House achieve this goal much sooner than anticipated so they’ve raised their target to 15,000.
Interest from Japanese companies is partially driven by the desire to diversify portfolios as well as favorable demographics in the United States. Margaret Whelan, founder and CEO of Whelan Advisory, says Japanese companies also have access to inexpensive equity and debt capital, allowing for more aggressive valuations on prospective deals with U.S. home building companies.
“The population in the U.S. is growing exponentially and it is growing relative to Japan. The margins on the return on capital are very attractive to them, more attractive than they get at home,” Whelan says. “And the depth of the U.S. market; Japan would fit inside a California, so our market is just so much bigger for them. They are very efficient home builders. It is possible now that as they gain scale, they will start to leverage some of those efficiencies.”
In addition to the size and diversity of the U.S. market, Carl Reichardt, managing director of research and home building analyst for BTIG, says the fragmented nature of the U.S. home building sector and chronic underbuilding also appeal to foreign builders.
“[The United States] is a market the world believes is undersupplied. We have been building fewer houses than normal for a long time since the Great Financial Crisis. That’s a driver,” says Reichardt. “It’s a fragmented industry in the United States. Most companies in the home building industry are private. When a founder of a private home builder is interested in retiring or stepping down or is looking for growth capital if they want to stay, then offshore sources are convenient.”
Sekisui House debuted on the 2024 Builder 100 list as the 20th largest company with 4,442 closings in 2023. The listing accounted for closings from its U.S. portfolio of Woodside Homes, Holt Homes, Chesmar Homes, and Hubble Homes, but excluded closings from M.D.C. Holdings, which itself ranked 12th on the 2024 list with 8,228 closings in 2023. With its portfolio spread across 16 states, Sekisui House is targeting annual closings close to 15,000, which rank as a top five production builder in the United States.
Daiwa House subsidiary CastleRock Communities acquired The Jones Co., with operations in Nashville, Tennessee, while another subsidiary, Stanley Martin Homes, acquired land acquisition, development, and lot sales business Prestige Corporate Development. In addition to CastleRock Communities (No. 52 on the 2024 Builder 100 with 1,367 closings in 2023) and Stanley Martin (No. 22 with 4,291 closings in 2023), Daiwa House’s U.S. portfolio also includes California-based Trumark Homes, the No. 73 builder with 766 annual closings in 2023.
Sumitomo Forestry subsidiary DRB Group—No. 24 on the Builder 100 list—expanded its Southeast presence in 2024 with the acquisition of Biscayne Homes. The Japanese company’s U.S. portfolio also includes Brightland Homes, Bloomfield Homes, Edge Homes, and MainVue Homes, the 30th, 44th, 54th, and 172nd ranked builders on the 2024 Builder list.Misawa Homes Co. acquired 51% of Utah-based Visionary Homes—the 87th largest company on the 2024 Builder 100—in July, bolstering its U.S. portfolio which also includes Texas-based Impression Homes, the 84th largest company on the Builder 100.
Whelan says Japanese companies are not only increasing their interest in the U.S. market but are looking to close deals faster than they have in the past.
“Half the deals we are working on, the Japanese buyers are winning out on valuation. The trend is that they are more comfortable, they are looking to close more deals, they are looking to close bigger deals, and they are closing faster,” Whelan says. “It used to be that it would take 12-plus months for us to close a deal with a Japanese buyer; now, it is closer to six.”
The ability to close deals faster is making Japanese buyers more competitive on more than just valuation with sellers who place a high value on getting deals over the finish line.
“Many of these companies have been in the U.S. for a while and have bought a number of companies, so they are not just asset purchasers. They are company purchasers, so they are willing to pay more for private companies,” says Reichardt.
The Japanese companies also offer a unique opportunity relative to other buyers with their partnership mindset: they often retain the existing team and legacy of their acquired companies, which fosters a collaborative environment and goodwill, according to Whelan.
“One of the things the Japanese buyers have done a very good job of is not forcing synergies. They essentially enable the seller to keep their business, their brand, their name on the door, and to grow the business and platform exponentially with much more and much less expensive capital,” Whelan says.
“Whereas with the U.S. publics, they tend to be focused on their brands,” she says. “They are investing in their product, their marketing, their design; they are trying to attract customers for life. Which means they are going to remove the brand of the seller.”
She says around half of the deals discussed at the beginning of the year are with Japanese buyers.
The interest comes at a time when “the pace of M&A is probably as high as we’ve ever seen.” The deals are also taking place outside traditional markets, due to the strong market share acquiring companies already possess in major metros. Reichardt says because the top 10 builders in major metro markets possess between 70% and 90% market share, acquiring smaller builders in existing markets is unlikely to yield significant market share gains.
“We believe that you will see more public builders look to do acquisitions in small, tertiary markets. These markets are interested in growth, have relatively inexpensive land, have relatively easy permitting and build processes compared to many of the large metros, and have less competition,” Reichardt says. “Look at the deal done recently by Meritage Homes [acquiring Gulf Coast builder Elliott Homes], look at the Lennar deal for Rausch Coleman, look at the new markets these companies are entering. These are the kinds of things we expect more U.S. publics will ultimately do.”
In addition to the well-capitalized public buyers and Japanese companies interested in hitting volume and growth targets, valuations for selling companies are as strong as they have ever been. All these elements contribute to projections that the strength of the M&A market—which had record level of activity in both 2023 and 2024—will continue through 2025.
“There have never been more buyers with more money from more places in the world. Not just the Japanese buyers, but big builders, and newly public builders [as well],” Whelan says. “When you have more buyers than you’ve ever had, that leads to increasing demand and higher valuations for the sellers. That means it’s a seller’s market. Anyone who is thinking about selling their company always wants to try and maximize their value. And what they are seeing today is the valuation multiples are as high as they have ever been before.”
