Merger and acquisition (M&A) activity rang in 2024 with a bang—six deals were announced in the first six weeks of the year—and has remained strong throughout the calendar year.
A combination of factors—including the volume of well-capitalized buyers, interest from foreign companies in the U.S. housing market, and high demand and valuations for sellers—is contributing to the strength of the M&A market, and the rapid pace at which deals are being consummated.
“I would say the pace of M&A is probably as high as we’ve ever seen,” says Margaret Whelan, founder and CEO of Whelan Advisory.
The blockbuster merger between Sekisui House and M.D.C. Holdings in January was the headline deal of 2024 and the first of several deals completed by Japanese companies in the calendar year. Additionally, national public companies were active in the M&A market, either looking to build a presence in newly established markets—Landsea Homes’ acquisition of Antares Homes—or expand into new markets—deals by Century Communities, Dream Finders Homes, Taylor Morrison, Meritage Homes, and Lennar.
“There have never been more buyers with more money from more places in the world,” Whelan says. “When you have more buyers than you’ve ever had, that leads to increasing demand and higher valuation 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.”
Following Lennar’s acquisition in mid-November of Rausch Coleman Homes—the No. 21 company on the 2024 Builder 100 list—Whelan says there’s little reason to believe the pace of M&A activity will slow down, with 2025 having the potential to be another record year.
“We have this fascinating dynamic whereby one of the reasons it is a seller’s market in the home building industry right now is because the smaller, private, less liquid companies are selling at a premium to the bigger, public, very liquid companies, which is highly unusual in any industry. More liquidity usually means more value, because there is more optionality,” Whelan says.
With the election settled and a general road map for mortgage interest rate expectations following the Fed’s recent cuts, there is more certainty in the market. Additionally, sellers will likely remain motivated either due to capital constraints or difficulty getting favorable lot positions due to the expansion efforts of national public companies.
“The new-housing market will continue to be very strong. The economy is very strong. People are earning well and have a lot of savings,” Whelan says. “I don’t see any reason to think this will slow down. We will likely be busy for the foreseeable future.”
Reflecting on the home building deals completed in 2024, a key theme is diversification. Buyers are looking for access to a wider range of product types or entry into a new price point.
“[Buyers] are looking for more price points, a wider range of products, and more types of product, [including] single-family, higher density, townhomes, etc.,” Whelan says. “Often the buyer is saying it is cheaper to pay a premium for someone who is already established with that offering than to do it on their own.”
Japanese Buyers
Interest in the U.S. housing market from foreign buyers is not a new development. Since 2013, Asian buyers alone have acquired more than 30 builder or construction service companies. However, since 2023, the rate of activity from Asian buyers—particularly Japanese companies—has accelerated.
Interest is driven partially by the desire to diversify portfolios as well as favorable demographics in the United States. The pace of population growth in the United States, the margins on the return on capital, and the depth of the U.S. market are all attractive elements for Japanese buyers, according to Whelan.
Japan-based Sekisui House’s portfolio of U.S. home building companies includes Woodside Homes, Holt Homes, Chesmar Homes, Hubble Homes, and M.D.C. Holdings. The company’s combined portfolio, excluding M.D.C. Holdings, earned Sekisui House the No. 20 spot on the 2024 Builder 100 list. With the M.D.C. Holdings acquisition, Sekisui House is on pace to achieve its target of supplying 10,000 homes outside of Japan much sooner than its initial target of 2025.
Japanese companies Daiwa House, Sumitomo Forestry, and Misawa Homes Co. also continued their expansion in the U.S. housing market in 2024.
Daiwa House subsidiary CastleRock Communities acquired The Jones Co., with operations in the Nashville, Tennessee, market while another subsidiary, Stanley Martin Homes, acquired land acquisition, development, and lot sales business Prestige Corporate Development. Daiwa House’s U.S. portfolio also includes California-based Trumark Homes.
Sumitomo Forestry subsidiary DRB Group expanded its Southeast presence with the acquisition of Tampa, Florida-based Biscayne Homes in March. Sumitomo Forestry’s portfolio also includes Brightland Homes, Bloomfield Homes, Edge Homes, and MainVue Homes.
Misawa Homes Co. acquired 51% of Utah-based Visionary Homes in July, bolstering its U.S. portfolio, which also includes Texas-based Impression Homes.
“Half of 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.”
Whelan says Japanese buyers are attractive options for sellers because they have set a precedent of “not forcing synergies.” Instead, they enable the seller to keep their business and brand name with support to grow exponentially. This practice differs from the national public home builders, who are more likely to remove the brand of the seller to help build their own brand name and product.
National Public Buyers
Strong balance sheets from public home builders has contributed to their increased activity in the M&A market. Over the past two years, 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 acquisitions.
Additionally, Whelan says the level of activity from Japanese buyers is also causing U.S. buyers to become more active in the market. She says Japanese buyers typically come in with offers at a higher dollar amount or a higher multiple than U.S. buyers, and, historically, the U.S. buyers have relented, not willing to pay more than what their stock is trading at on the market.
“But, I would say in the last few months, since the fall, with some of the new deals we’ve been marketing, the U.S. buyers are realizing how much they are losing out on these deals, so they have to sharpen the pencil,” Whelan says.
Since the start of the year, Lennar has completed two deals, acquiring WCH Homes and Rausch Coleman Homes. The deals expand Lennar’s existing footprint in Alabama, Florida, Georgia, Oklahoma, and Texas and mark the home builder’s entrance into new markets in Alabama, Arkansas, Kansas, and Missouri.
Meritage Homes, the No. 5 company on the Builder 100 list, completed its first deal in a decade, expanding into the Gulf Coast region through its acquisition of Elliott Homes. Similarly, Taylor Morrison expanded into a new market—Indianapolis—through the acquisition of Pyatt Builders.
Whelan says a nuance of several deals completed by the asset-light public companies, including Taylor Morrison and Lennar, is that transactions “are being consummated with a third-party land banker at the table.”
United Homes Group bolstered its footprint by acquiring Creekside Custom Homes in January, complementing the newly public home builder’s 2023 acquisitions of Herring Homes and Rosewood Communities. Following its corporate relocation to Dallas, Landsea Homes significantly enhanced its footprint in the metro area with its January acquisition of Antares Homes.
Century Communities has completed two deals in 2024, entering the hot Nashville market by purchasing Landmark Homes and doubling its Houston footprint by acquiring Anglia Homes. Dream Finders Homes also expanded into Nashville, as well as established a presence in Charleston and Greenville, South Carolina, through its acquisition of Crescent Ventures.
The strong interest in expansion into Nashville reflects the desire from builders to establish a presence in demographically strong geographies. Nashville was ranked seventh by the National Association of Realtors on its list of metros with the most pent-up demand, while the metro consistently ranks high on Zonda’s Baby Chaser index. Moving forward, Whelan says markets in the Southeast, including Greenville, may see similar popularity among expanding public builders.
Keep the conversation going—sign up to our newsletter for exclusive content and updates. Sign up for free.
