The 2015 top ten publicly-traded builders captured a 25.6% share of new single-family home closings, down from 26.4% in 2014. The 25.6% share in 2015 is out of the 502,000 new home sales reported by the Census Bureau. However, this count represents a smaller share of the total single-family market when not-for-sale, custom home building is included.
The merger of Standard Pacific and Ryland to CalAtlantic triggered the major change in the 2015 composition of the top ten builders. Despite that merger plus Pulte’s acquisition of John Wieland Homes, the concentration in sales among the top five builders declined slightly to 19.1% in 2015 from 19.7% the previous year. The large increase in new home sales to 502,000 in 2015 from 439,000 in 2014 was shared beyond the five largest builders. The top ten builders closed on 128,305 new homes according to their respective 10K filings for 2015.
The companies’ fiscal years vary and do not perfectly align with calendar years, but the comparison was made against their prior year 10K filings for uniformity. Comparing the top ten builders from 2010 through 2015, the top ten shares based on annual SEC 10Ks were, in order, 26.9%, 24.3%, 23.9%, 25.3%, 26.4% and 25.6%.
Publicly-traded companies possess many advantages including better access to credit from their own balance sheets, economies of scale in land and material purchases as well as in advertising and land holdings. However, small builders are better positioned to address the growth in and the knowledge of their local markets and their flexibility allows them to customize their product to meet local demands and preferences. Also, small home building companies usually have their roots in the local market and can use those more personal relationships to improve quality and increase repeat business.
The number of starts of homes built on an owner’s land, with either the owner or a builder acting as the general contractor, tallied 158,000 in 2015. Hanley-Wood will report in May the BUILDER 100 rankings of builders for 2015 closings and more geographic detail will also be available. At that time, we will examine the change over time in the top 100, top 50 and top 20 builder share.
The often held small builder concern that the large national companies will take share away has not occurred. The residential construction industry remains primarily a sector dominated by a large number of small entrepreneurs.