Builder Market Share Snapshot – December 2016

The impact of the Great Recession and M&A activity has had a marked impact on builder market share around the country. Public builder consolidation has changed the face of construction in some markets, while in others, such as Houston, we find a high volume of activity sourced to private regional and super regional players. 

What’s true in virtually all markets is that, whether builders are public or private, the consolidation of builder market share is real and substantial. Viewed nationally through the lens of housing starts, the share of the top 10 builders in across our tracked markets has grown by 31% since 2008. Public builders form the bulk of the top 10 constituency and continue to strengthen their positions. In the past year, the publics represent 45% of the starts activity nationwide, an increase of more than 10% since 2008.

The increased concentration of market share in its top 10 builders from 2008 to 2016 has been dramatic in some markets. For example, Atlanta and Portland, Oregon have seen their top 10 builders’ market share triple in the past 8 years driven by the explosive growth of public and private builder activity in those markets.

change-in-builder-share

Here’s what the top 10 builders’ market share and the market share of the public builders looks like across selected markets as of 3Q16.

2016-top-10-bulder-share

Local market highlights and notes from our local market experts:

The Philadelphia market is very consolidated with the top 5 builders (large publics) who actually account for almost all the activity in this market; this has been the trend for a number of years. “Many of the smaller and regional builders have either been absorbed by larger builders whom want access to attractive land and lot positions or have become strictly developers or have left the industry all together,” says Quita Syhapanya, Regional Director, Philadelphia region.

Vaike O’Grady, Regional Director, Austin, notes that, in her market, the top 10 builders drive more than 50% of starts activity with the top two builders (DR Horton and KBHome) representing nearly 20% of the market.  Both builders are focused on value with 88% of DR Horton’s starts and 97% of KBHomes’ starts being in the under $300K price range.

Tony Polito, Regional Director, Tampa and Sarasota-Bradenton, indicates that his markets are two of the more concentrated markets for top 10 builders. In Tampa, the market share of the top 10 builders has grown from has grown from 41% of all starts in 2008 to 67% in 2016. Statewide, the top 10 builders have increased their share of the market by 10% over the past eight years.

In the Midwest, the top 10 builder share of starts activity has almost doubled to 43% in Chicago, and is a “whopping 76% in Indianapolis which is similar to what Chicago experienced before the recession,” says Mark Gianopulos, Regional Director, Chicago/Indianapolis.

In Las Vegas, the top 10 builders have grown their share by 51% in the past 8 years and now own 76% of the starts activity.

Other markets are not experiencing the same level of consolidation. In Raleigh for example, “we see a really fragmented field, with the top 25 builders having 63% share of the market and it has been this way for years with very little long term change,” notes Jay Colvin, Regional Director, Raleigh/Durham.

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