Lennar & CalAtlantic: A Local Perspective

America’s No. 2-ranked homebuilder, Lennar announced a $5.7 billion merger deal with No. 5-ranked CalAtlantic. This combined entity creates the largest home building enterprise by revenue ($17 billion in 2016 revenues, according to our Builder 100 data) and a major presence in 24 of the top 30 nationwide housing markets.

With nationwide new home starts continuing to trend upwards, the combined company will control over quarter of a million home sites across the country.

What does this mean for local markets around the country?

We asked a few of our local market experts to weigh in and share their thoughts on how this merger will affect their markets.

Phoenix, AZ

Both Lennar and CalAtlantic are top 10 builders in the Phoenix market (number 6 and number 4, respectively).  Ryan Brault, Metrostudy’s Regional Director in Phoenix, notes that the merger will make Lennar-CalAtlantic the number 1 builder in Phoenix, both in annual starts and annual closings, ahead of DR Horton, which is currently the number 1 builder here.   The combined Lennar-CalAtlantic will have a roughly 11.4% market share of all new home activity (DR Horton currently is #1 with a little over 10% market share).

The acquisition immediately expands Lennar’s presence in the market, especially in certain submarkets such as South Phoenix, South Buckeye, East Mesa, and Queen Creek, as well as their future presence in the Gilbert submarket. Lennar will now also have an operating presence in Scottsdale, West Chandler, and certain infill areas of Phoenix where CalAtlantic is currently selling in active communities.

“Having spoken to a few people on the CalAtlantic side locally, they were unaware of the acquisition until it became public knowledge.  Most have said they will simply continue to operate as usual and let it play out,” Brault said.

Dallas, TX

In the highly competitive DFW new home market, the merger between Lennar and CalAtlantic secures the highly coveted #2 ranking by market share.  Metrostudy’s Regional Director in Dallas – Ft. Worth, Paige Shipp, notes that “With a proposed 6.3% market share (by closings), their share of new home closings will be significantly smaller than in other markets, but their increased presence will be palpable.” In DFW, Lennar and CalAtlantic have very little overlap in both land positions and product.  So, they will truly be increasing their footprint.  However, DR Horton remains the solid frontrunner in our market with 15.7% market share.


In the Raleigh-Durham market, Lennar and CalAtlantic are number two and number three, respectively, in market share for new home sales. Both companies have aggressively been targeting sizable, new land and lot purchase opportunities in key growth submarkets the past few years in an effort to increase market-share. “Many of Lennar and CalAtlantic’s competing subdivisions are right across the street from one another,” notes Amanda Hoyle, Metrostudy’s Regional Director in this market.

The combined company will create a solid, new market leader in the Triangle with a potential 11% total new home market share post-merger. “Pulte Homes, which has been battling to hold back both Lennar and CalAtlantic from stealing its market share in the region for the last several years, will be pushed to second place with just under 7% market share,” Hoyle said.


“In the Charlotte market, Lennar has been battling DR Horton for the largest share of the new home market for some time now,” reports Jennifer Gooch, Metrostudy’s Charlotte Regional Director.  Lennar is in the lead with 10.9% of the market, compared to DR Horton’s 10.5% as of the 3rd quarter of 2017.  The slight Lennar lead is fueled by their dominant position in the South Carolina market, where they capture 26% of all starts.  CalAtlantic holds the 5th position for annual starts at 720, or 6% of the market.  It was not long ago, back on October 1, 2015, that CalAtlantic came into being when Standard Pacific and Ryland Homes combined their operations.  Combined, Lennar-CalAtlantic will have 16.9% of the Charlotte market, equating to 2,028 starts as of 3Q2017.

According to Metrostudy’s quarterly data, as of 3rd quarter 2017, Lennar’s futures are around 2,258. As many in the Charlotte builder community will report, land availability and pricing, rising labor and development costs, and increased municipality fees have hindered lot development.  “Through mergers, builders are able to increase their futures, vacant developed lot count, under construction units, and finished vacant units on the ground without undergoing the increasing pain and cost of land acquisition,” Gooch said.

Gooch and other local market experts at Metrostudy predict that the new home market is likely to continue its consolidation into larger builders with greater national footprints who are able to weather increasing land acquisition costs and lot development fees, as well as any housing market downturns through diversification of housing stock locations and pricing across the country.

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