Housing Construction More and More Frequently the Product of Two Companies

The history of U.S. housing construction has traditionally been the story of many companies building a few homes a year. Now two companies alone are out-building the rest of the top ten homebuilders combined.

Gopal Ahluwalia, Kermit Baker, and Kent Colton write for the Joint Center for Housing Studies of Harvard University to examine trends in the housing construction industry. The headlining finding of the report: a few homebuilders are responsible for the vast majority of new homes sold in the United States, with two companies in particular, Lennar and D.R. Horton, cornering more and more of the homebuilding industry.

In a new working paper titled “Concentration in the Homebuilding Industry: Trends, Strategies, and Prospects,” the researchers find that “[t]he 100 largest home builders in the US now account for about half of all new single-family home sales, up from just over a third two decades ago.” That market summary comes with a significant caveat: two companies, D.R. Horton and Lennar “were responsible for almost two-thirds of the gain in market share among the top 100 builders from 2002 to 2020.”

“As a result of this growth, these two firms now build more homes than the combined total of the nation’s third to tenth largest home builders,” add the authors. The trends are noteworthy, because “the homebuilding industry has traditionally been one of the most fragmented industries in the US economy.”

The source article, linked below, includes more data and infographics to introduce the working paper.