Top Ten Publicly-Traded Builder Share Ticked Up One Percentage Point in 2013

The top ten publicly-traded builder share of new home closings ticked up as a share of total US new home sales to 25.3% in 2013 from 23.9% in 2012. The 25.3% share in 2013 is out of the 430,000 new home sales reported by the Census Bureau for 2013.

2013

The composition of the top ten builders changed in 2013. Taylor Morrison went public and ranked number 7 in 2013. Lennar jumped to number 2 ahead of Pulte, and MDC fell from the top ten. Collectively, the top ten builders closed on 108,732 homes according to their respective SEC 10K filings for 2013.
The companies’ fiscal years vary, but the comparison was made against their prior year 10K filings for uniformity. Comparing the identical ten builders from 2010 through 2013, the top ten shares were 26.9%, 24.3%, 23.9% and 24.9%. In May 2014, Hanley-Wood will report the BUILDER 100 rankings of builders for 2013 closings with adjustments to more accurately accommodate fiscal years that are not aligned with the calendar year.

2010-2013

The publicly-traded companies possess many advantages compared to small builders including better access to credit from their own balance sheets, economies of scale in land and material purchases, advertising and carried land holdings. Some analysts anticipated that the large builders would eventually grab a larger share of the total housing market, and that the recession was an opportunity to do so as land values declined dramatically. Some mid-sized firms were acquired by large builders during the past two years. Also, large builders have taken a larger share in some metro areas.

However, during the housing boom of the early 2000s, large builders operated most robustly in the South and Southwest. When those markets declined during the recession, the large builders had to make significant adjustments. As the recovery progresses, these national firms have been able to direct resources to markets experiencing more rapid recoveries, and slow construction in some of the worst hit markets.

In the meantime, 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.