National Housing Market Outlook

Home Builder M&A Explodes in 2024

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Danielle Nguyen

March 1, 2024

Strong balance sheets and favorable market fundamentals have sparked a blaze of home builder M&A transactions in 2024.

In 2023, public and private builders closed 12 mergers and acquisitions (M&A) deals, above the historical long-term average of 8.

Already in 2024, we’ve seen five transactions and two M&A announcements from home builders. (There’s also been some consolidation in the building products space, too.)

Our consulting team has been busy doing M&A due diligence for portfolio analyses. We research the market and estimate revenues, values, and returns in the M&A and IPO processes for these transactions. To view a high-level due diligence and asset valuation case study that our team completed, click here. Our team of experts is strategically positioned across the country, giving us the scale necessary for large M&A and IPO projects.

Why has home builder M&A ignited in 2024? 

  1. Strong balance sheets with little to no debt
    • Publicly traded US and Japanese home builders are using their extra cash to buy back stocks, purchase land acquisition, or become active in the M&A space. 
  2. Strong fundamentals
    • US housing remains undersupplied, which is appealing to all but particularly appealing to Japanese companies whose domestic growth opportunities are quite limited.
  3. Low resale supply is driving buyers to the new home market.
    • Builders are well positioned for growth thanks to their ability to offer incentives and mortgage rate buydowns while still achieving stellar gross margins.  
  4. Public builders are poised to grow market share.
    • Public builders have clear advantages over smaller private builders: 
      • Bigger builders have the size and scale, access to labor/materials, and relationships with land sellers to create efficiencies and cost savings.
      • Public builders have a lower cost of debt (less expensive to borrow) than private builders and generally don’t need to borrow to buy a large company.
  5. Private builders are in a great spot to sell if they have plentiful land or operations where an acquirer desires to expand.
    • With fewer finished lots and constrained land supply, private builders with a foothold in their markets are attractive to larger builders looking to grow their footprints. 
    • Great operators are particularly attractive to Japanese buyers, who often incentivize sellers to stay on and earn additional profits over time.

Transactions announced in 2024 (several of which we worked on)

Completed transactions (See the chart below for a historical comparison.)

  • Smith Douglas Homes debuted as a public builder (IPO) in January.
  • Century Communities acquired Landmark Homes, expanding its geographic footprint in Nashville.
  • CastleRock Communities purchased The Jones Company, expanding its geographic footprint in Tennessee.
  • United Homes Group acquired Creekside Custom Homes, growing its presence in Myrtle Beach.
  • Dream Finders Homes acquired Crescent Homes, moving into South Carolina and Tennessee. 

Announced transactions

  • Sekisui House has plans to acquire M.D.C. Holdings, making it one of the largest builders in the US. The companies expect the acquisition to close in the first half of 2024.
  • Landsea Homes announced plans to expand its Texas presence with the acquisition of Antares Homes (Dallas-Fort Worth expansion).

Our experienced consulting team has been busy in the first eight weeks of the year, helping complete due diligence for M&A transactions. Our research team offers clients the latest insights into market trends, backed by our comprehensive forecasts spanning the for-sale, for-rent, and building product markets. 

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About The Author

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Danielle Nguyen
Vice President of Research
Danielle manages, implements, and analyzes the housing market with a specific focus on for-sale and for-rent research. She is a research content creator who produces high-quality, insightful, and forward-looking housing research and a trusted resource (connector) for clients and those interested in JBREC’s research.

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