New Housing For-Sale Builders
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 11,800 new housing for-sale builders in the US build single-family and multi-family homes on land that is owned or controlled by the builder. New housing for-sale builders are also known as merchant builders, production builders, or operative builders. Large firms may also provide related services, such as mortgage financing or title services.
High Cost of Land Investment
The new home building industry is capital intensive and requires significant upfront investment in land, the value of which can vary depending on market conditions.
Dependence on Subcontractors
New home construction is highly dependent on subcontractors, with most firms directly employing a limited number of workers to oversee subcontracting activity.
Industry size & Structure
The average new housing builder operates out of a single location, employs about 5 workers, and generates nearly $13 million annually.
- The new housing building industry consists of about 11,800 firms that employ 53,500 workers and generate about $150 billion annually.
- The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for 55% of industry revenue.
- Large firms include D.R. Horton, Lennar, and Pulte Group.
- Most of the new homes built in the US are “built for sale” or built by a developer that owns the land.
Industry Forecast
New Housing For-Sale Builders Industry Growth
Recent Developments
Nov 25, 2024 - US Housing Market to Improve in 2025 and 2026
- After two years of high interest rates and home prices hindering home sales, the US housing market is expected to improve in 2025 and 2026, according to a November forecast by National Association of Realtors chief economist Lawrence Yun. New home sales are forecast to increase by 11% in 2025 and 8% in 2026. Existing home sales are expected to rise 9% year-over-year in 2025 and then climb 13% in 2026. Key demand drivers include a healthy labor market and population growth. The average 30-year fixed-rate mortgage over the past 52 weeks has ranged between 6.08% and 7.44%, according to Freddie Mac. Yun says he believes mortgage rates will be near the bottom end of that range in 2025 and 2026.
- The wages of residential building workers posted a year-over-year increase of 9.9% in September after jumping 10.8% in August, according to analysis of Bureau of Labor Statistics data by the National Association of Home Builders (NAHB). Wages in residential construction have been rising even as the number of job openings in the construction sector has fallen. There were 288,000 construction sector job openings in September compared to 328,000 in August. Wages in the residential building construction industry have been rising amid overall wage growth and a shortage of skilled labor in the construction market.
- Amid high interest rates, home builders have lured buyers with mortgage rate buydowns, but as interest rates begin to move lower, buydown strategies could stop penciling out, and builders may have to shift strategies, according to The Wall Street Journal. In mortgage rate buydowns, builders take on a portion of the interest rate costs – for all or a portion of the mortgage’s term – which gives the homebuyer a lower rate. However, buydowns have begun to eat into builders’ profits. The buydown strategy worked for builders as existing homeowners who felt locked in by their low mortgage rates kept their homes off the market, thereby reducing competition. However, as interest rates begin to move lower, more homeowners will decide to sell, introducing more price competition to the market. Industry observers suggest that builders may need to table their buydowns and pivot to other strategies to compete with existing homes, such as reducing home prices.
- Home builder confidence in the single-family market increased in November, marking the third consecutive month of sentiment improvement, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose three points to 46 in November 2024. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The NAHB said builders are generally upbeat about the election outcome, and future sales expectations improved in November. The HMI survey also showed that 31% of builders reduced home prices in November, and the average price reduction fell slightly to 5% from 6% in October.
Get A Demo
Vertical IQ’s Industry Intelligence Platform
See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.
Build valuable, lasting relationships by having smarter conversations -
check out Vertical IQ today.