After a busy end to 2024, the M&A market has had a strong start to 2025 with three deals announced to date thus far.
In the first weeks of 2025, Dream Finders Homes has acquired Atlanta-based Liberty Communities, Drees Homes has acquired Monticello Homes in San Antonio, and the newly established Defy Investments purchased Indianapolis-based Davis Homes.
“If you look at the home builders, they’re generating a lot of cash and they’re not growing as much,” says Tony Avila, founder and CEO of Builder Advisor Group. “The builders are generating cash right now and looking at how to grow this year and beyond. They’re looking at M&A and that’s what keeps us very busy.”
Avila’s Builder Advisor Group served as the sell-side advisor for Monticello Homes in its sale to Drees Homes. Based on the group’s backlog and the strong appetite for M&A, Avila expects the pace of acquisitions to remain strong through 2025.
The factors supporting the M&A market remain strong, providing a solid runway for continued activity. In addition to a large volume of well-capitalized buyers, strong interest from foreign companies and high valuations for sellers are making the M&A market active and attractive for buyers and sellers.
“[For sellers], land prices are stiff [and] margins are getting squeezed. Vacant developed lots are scarce and banks have pulled back on lending to private builders,” Avila says. “With all those reasons, valuations are good [and] they’re attractive.”
Avila says the amount of interested buyers is as robust as it has ever been, with multiple offers being made for each company for sale. The interest in the U.S. housing market by foreign buyers has been increasing in recent years. Japanese buyers, including Sekisui House, Daiwa House, and Sumitomo Forestry, have been particularly active in the M&A market over the past two years. Avila says buyers in South Korea and China also have a strong interest in the U.S. housing market, with diversification, cost of capital, and demographics driving interest.
“The demographics [in Japan, Korea, and China] are not like the demographics in the United States. We have this massive Millennial generation coming on board that are going to want to own houses over the next five plus years,” Avila says. “[Conversely], the population is shrinking in Japan; the population is shrinking in China; the population is shrinking in South Korea.”
Avila says Canadian companies are also vesting an interest in the domestic market, looking to diversify by investing in the United States looking to grow.
Interest in M&A for public builders is also on the rise, as D.R. Horton, Lennar, Meritage Homes, Taylor Morrison, Century Communities, Dream Finders Homes, Smith Douglas Homes, Landsea Homes, and United Homes Group all completed at least one deal in the past two years.
While public builders and foreign companies have dominated the headlines in the M&A market, Avila says there is an increasing number of private builders looking to grow via acquisition.
“Right now we are seeing that another significant trend is more private builders,” Avila says. “Some of the private builders that haven’t necessarily been in the M&A market are stepping in right now.”
Drees Homes is the most recent example, but in December, two private builders completed acquisitions. Atlanta-based McKinley Homes—No. 120 on the 2024 Builder Next 100—moved into Houston with the acquisition of No. 168 builder Liberty Home Builders. Additionally, Texas-based Perry Homes—No. 25 on the 2024 Builder 100—took further steps expanding its Florida footprint by acquiring MasterCraft Builder Group.
New, Secondary, and Tertiary Markets
Two of the deals completed in 2025 highlight home builders expanding into highly attractive housing markets.
Dream Finders Homes’s acquisition of Liberty Communities expands its portfolio to the Atlanta metro—both the largest home-building market in the Southeast and the sixth largest in the U.S. Dream Finders CEO Patrick Zalupski said Atlanta was “one of our highest-priority expansion markets,” citing the metro’s large single-family housing market as a key draw.
Drees Homes’s acquisition of Monticello Homes rounded out the builder’s Texas portfolio, adding a presence in San Antonio—the fifth largest single-family housing market.
Avila notes that in addition to filling out portfolios in attractive single-family markets, builders are also looking toward expanding into secondary and tertiary markets. For example, Lennar’s acquisition of Rausch Coleman expanded the public builder’s portfolio into new markets in Arkansas, Oklahoma, Kansas, and Missouri. Similarly, Meritage Homes’s acquisition of Elliott Homes added a presence for the company in Mississippi, Alabama, and Florida panhandle markets in the Gulf Coast region.
“The margins that you can achieve and the accessibility to land in these markets is far better. 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,” Avila says.
As for deals in the pipeline, Avila says builders are focusing on filling portfolios in secondary markets in the Mid-Atlantic as well as Florida, Texas, and Colorado market. When builders find the right company for expansion, there are advantages to being an early mover in these markets.
“Early players getting in can get the land positions [and] hire the best people,” Avila says. “But also, when you’re going and buying a company in that market, you get the company that’s a strong growth company with strong leadership and strong management.”
