Residential Real Estate Construction

About 170,000 companies build or renovate homes in the US, with combined annual revenue close to $500 billion. Large builders include Pulte, Lennar, and DR Horton. Most builders are small, with about 10 employees, build from five to 20 homes per year, and have annual revenue under $3 million. Only about 2,000 companies have annual revenue greater than $10 million. The industry remains fragmented: although large companies may build more than 20,000 homes per year, the top 10 builders together hold only 20 percent of the market.

COMPETITIVE LANDSCAPE

Demand for new housing depends on population growth and is linked to low interest rates. Large builders have some advantages in purchasing and marketing, but building methods are essentially the same for large or small builders. While larger builders have efficiencies because they can repeatedly build the same home models, they generally develop projects on large pieces of land. Small builders, therefore, build most homes in dense urban markets where little land is available.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products are single family homes and multifamily buildings. Of an average 1.7 million homes built each year, 80 percent are single family and 20 percent are units in large apartment-style buildings. Multifamily units can be either apartments or condos. Home remodeling accounts for about 20 percent of industry revenue. Companies generally specialize in either single family or multifamily work.

The building process consists of distinct steps: land acquisition; land development ...