Is Industry Consolidation Holding Home Building Back?

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The industry is improving, but not enough

September 09, 2015

A house being built in Katy, Texas. Photo: Jaksmata/Wikimedia Commons

While not a burden on the economy anymore, the housing sector is still lagging behind where it was less than a decade ago, according to the Wall Street Journal.

A few factors are in play. Considerably fewer builders are in business than there were before the late 2000s housing crisis. That’s led to consolidation, as the 10 largest builders took 26 percent of the new-home market in 2014.

Lenders are also consolidating, as the top 10 originators funded 60 percent of loans in the first half of 2013. The figure was less than 30 percent two decades ago.

Constructing starter homes in suburbia is considered risky a venture, and builders shifted toward selling fewer but more expensive homes with more square footage.

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