Concentration of Large Builders in Metropolitan Markets

NAHB analysis of information published in Builder Magazine shows that large builders gained market share on average each year from 2009 to 2014 in major metropolitan housing markets, before concentrations trended back somewhat in 2015. Figure 1 shows the annual average of the four statistics calculated for this analysis, and charts how these averages changed during the years following the recession.

37 MSA Avg

All four statistics indicate that major housing markets have become more concentrated since the trough of the housing crisis. The four firm concentration ratio increased from 30.3% in 2009 to 39.3% in 2014, before decreasing slightly to 38.8% in 2015.  The large national builders (those with 3,000 or more annual closings) increased their market shares on average from 26.8% in 2009 to 35.8% in 2014, before the share dropped back to 35.3% in 2015.  National and regional builders combined (those with 500 or more annual closings) increased their market share on average from 34.5% in 2009 to 47.6% in 2014, before the share dropped to 46.6% in 2015.

Miami

Of the metropolitan markets in this analysis, Miami-Fort Lauderdale-West Palm Beach, FL experienced the greatest increase in top four builder market share. This MSA had a four firm concentration ratio of 21.4% in 2009, and 72.9% in 2015, for a percentage increase of 240.7%.  During this seven year period, Lennar Corp.’s market share increased from 5.6% to 32.9% and Related Group’s market share increased from 5.9% to 21.2%.  The Miami, FL MSA also had the greatest change in national builder market share, increasing from 11.8% in 2009 to 47.1% in 2015.

Although Miami-Fort Lauderdale-West Palm Beach, FL was the single most notable MSA, the article includes many other interesting highlights. For example, three of the top five, and five of the top ten MSAs for 2015 four firm market share were in Florida.  Also in 2015, large national builders accounted for as much as 72.2% of market share in Baltimore-Columbia-Towson, MD, and as little as 4% in Oklahoma City, OK and St. Louis, MO-IL.

For a more detailed description of NAHB’s analysis of MSA builder concentrations follow the link to the full article. There you will find MSA rankings for each of the four concentration statistics, both for 2015 and percentage change from 2009-2015.  Accompanying the article is the full dataset used for this analysis and the trend graphs for forty-four MSAs.

Full Article



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