How 10 Homebuilders Quietly Took Over New Construction In America

Why Your Local New Builds All Feel The Same

If you feel like every new subdivision looks like the same three floor plans copy pasted across the country, you are not imagining it.

In many big US markets today, ten companies control 80 to 90 percent of all new homes that get built. In some metros, that concentration is even higher. In other words, most of the new supply that shows up in your Zillow search is coming from a handful of national brands, not thousands of local builders.

On paper, that sounds efficient. Fewer players, more scale, bigger budgets. But here is the uncomfortable twist: the very companies that could build more homes the fastest have strong incentives not to flood the market.

This is where things get interesting for you as a buyer or homeowner. Because for years you have heard the same line from politicians and talking heads: “We just need to build more homes and prices will come down.” The reality on the ground is more complicated, and a lot less comforting.

The New Reality: Just Building More Will Not Save Us

Let us start by taking that common slogan head on. The United States is short millions of homes. Different groups put the gap at around 4.7 million units nationwide, which is the biggest housing deficit we have seen in decades. Put simply, there are far more households who want a place to live than there are homes available.

So you would think the big homebuilders would be racing to build as many houses as possible. More demand, more sales, right. But if you listen to what their executives tell Wall Street, they are describing a very different strategy.

One large national builder stated that it is prioritizing price and margin over volume and is willing to build fewer homes than its physical capacity allows in order to protect profitability. In plain English, that means they are deliberately choosing not to build as many homes as they could, because keeping supply tight helps them keep prices and profit per home high.

Think of it like running a bakery. You could bake 100 loaves of bread and sell them for five dollars each. Or you could bake 60 loaves and sell them for eight dollars each. If your investors care more about how much profit you make per loaf than how many loaves you sell, you are going to bake fewer and charge more. That is margin discipline.

Over the past decade, large public homebuilders have averaged gross margins in the low twenties, and in recent years some have posted margins in the mid twenties or higher. For an industry that once rode big booms and painful busts, those numbers are calm, controlled, and very profitable.

Here is what that means for you: the cavalry is not coming. The companies best positioned to add a ton of new homes are being rewarded by shareholders for building carefully, not aggressively. They are not charities, and their first obligation is to investors, not to fixing the housing crisis.

How Ten Builders Took Half The Market

To understand how we got here, you have to zoom out a bit. Back in 1989, the top ten builders in America were responsible for less than ten percent of all new single family homes. The rest were built by thousands of small and mid sized local companies.

Fast forward to 2024 and those same top ten builders now account for around forty five percent of new single family closings nationwide. The top three alone build close to three out of every ten new single family homes. That is a fivefold increase in market share over a few decades.

What changed. The 2008 housing crash was the turning point. Imagine the housing market as a giant game of musical chairs. When the music stopped in 2008, a lot of small builders were left without a seat. They relied on local banks, had thin cash cushions, and could not survive months or years of frozen demand.

The large public builders had something the small guys did not: access to Wall Street capital and big credit lines. They could ride out the storm, buy land from distressed sellers at discounts, and pick up experienced staff who had just lost jobs at smaller firms.

Over time, tighter regulations, more complex building codes, higher fixed costs, and slower permitting all tilted the playing field further toward scale. If you are building five homes a year, a single fifty thousand dollar regulatory change can crush you. If you are building fifty thousand homes a year, it barely moves the needle.

Put simply, the system made it easier for large builders to survive and grow and harder for small builders to keep up. The result is a more concentrated industry where a small group of firms now set the pace.

Where Builder Power Is Strongest

National averages only tell part of the story. On the ground, builder concentration is extremely uneven.

Across the fifty largest new home markets in the country, the top ten builders typically control around eighty percent of new single family construction. In some metros, the numbers are even more dramatic. In Cincinnati, for example, roughly ninety eight percent of new homes are built by the top ten firms. In places like Cape Coral and Fort Myers in Florida, that share sits in the mid nineties.

In other words, in those markets almost every new home you see is coming from a short list of large companies. That is closer to an oligopoly than a competitive free for all. Think of a town where the only restaurants are three national chains. You still technically have choices, but they all operate from the same playbook.

There is also a geographic twist to all of this. The bulk of new construction today is happening in Sun Belt states and metros with cheaper land, faster permitting, and strong population growth. Texas, Florida, and parts of the Southeast have attracted hundreds of thousands of new residents and jobs, and builders have followed that demand.

By contrast, many coastal metros where affordability is worst build very few new homes each year. Yet those are the markets where buyers are struggling the most. The end result is a mismatch between where homes are desperately needed and where homes are actually being built.

The Land Grab That Keeps Supply In Check

Market share is one form of power. Control over land is another, and it is arguably even more important.

In recent quarters, publicly traded homebuilders have purchased well over sixty percent of all finished lots in the United States. Finished lots are pieces of land that already have roads, utilities, and approvals in place. They are ready for a house to be built.

On top of that, these builders often do not outright own every lot they plan to use. Instead, they rely heavily on lot options. That means they pay a fee for the right, but not the obligation, to buy specific lots in the future. It is like calling dibs on most of the buildable land in an area without having to buy it all today.

Lennar, one of the largest national builders, has reported that the overwhelming majority of its future home sites are controlled rather than owned outright through this kind of structure.

Here is why that matters. When a small number of firms control most of the finished lots in a region, they effectively control the faucet on new supply. They can decide how many lots to convert into homes this quarter, how many to hold for later, and which price tiers to prioritize.

If you are a smaller local builder, this is where the game gets tough. You are often left bidding for the scraps or pushed toward more marginal land on the fringes. In some markets, you simply cannot access enough good lots to compete at scale.

Think of it this way: if one group controls most of the playing field, everyone else plays on their terms. That is the quiet power behind the land grab.

Why New Homes Sometimes Look Cheaper Than Old Ones

Here is a twist that confuses a lot of people. Over the last couple of years, median prices on new homes have, at times, dipped close to or even below the prices of existing homes. That feels upside down. New is supposed to cost more, right.

Part of what is happening is a change in what builders are offering. Many national builders have shifted toward smaller, simpler floor plans and more price accessible product. Less McMansion, more compact starter home. That alone pulls down the median new home price.

The other big piece is incentives, especially mortgage rate buydowns. Instead of cutting the sticker price of a home by, say, fifteen thousand dollars, a builder might offer to permanently lower your interest rate by one percentage point or more by paying the lender upfront.

Let us walk through a simple example. Imagine you are buying a four hundred thousand dollar home. The market mortgage rate is 6.75 percent. On that loan, your principal and interest payment might land around twenty six hundred dollars a month.

If the builder offers a rate of 5.5 percent instead, your payment can drop by around one hundred dollars or more each month. Over the life of the loan, that reduction is real money. On the surface, it feels like a generous break.

But notice what did not change: the list price. The home still closes at four hundred thousand dollars. That number gets recorded in county records. It becomes a comparable sale for the next appraisal down the street. It anchors values in the neighborhood.

If the builder had instead cut the list price from four hundred thousand to three hundred eighty five thousand, your monthly payment would fall and the official sale price would drop. That would immediately weigh on comparable sales and could force more visible price reductions on future homes.

That is why buydowns are so popular. They let builders offer real short term help to buyers while preserving the nominal prices that keep their profit margins and future comps strong.

This is similar to a retailer offering a coupon instead of permanently lowering the price on the tag. You get a deal with the coupon today, but the official price the next customer sees tomorrow stays high.

Why This Is Not Just A Policy Story

It would be easy to blame everything on builders or everything on policy. The truth is messier. Both sides of the system matter.

On the policy side, higher tariffs on materials like lumber and steel have added thousands of dollars to the cost of a typical new home. Labor shortages in construction also push wages and project costs up. Local zoning rules that ban duplexes, small apartment buildings, or backyard cottages in many neighborhoods severely limit the types of housing that can be built at all.

In other words, it is objectively harder and more expensive to build a home in many parts of the country than it used to be. That is not just a private market issue. It is also about rules, incentives, and political choices.

But the structure of the building industry determines how firms respond to those pressures. A fragmented market full of small builders might overbuild during good times even with higher costs, leading to more supply and more price swings. A concentrated market dominated by a few disciplined national players is more likely to adjust carefully and protect margins, even if that means building fewer homes than buyers would like.

The combination is what matters: expensive inputs, restrictive rules, and a small number of big players that can afford to be patient. That is how you end up in a slow grind environment rather than a fast correction.

What All Of This Means For Buyers

If you are trying to buy in this environment, it can feel like you are playing a game where someone else wrote all the rules.

First, understand that new construction is now a much bigger slice of available inventory than it used to be. In recent years, roughly one quarter to one third of all homes for sale in some markets have been new builds, compared with around ten percent in typical pre pandemic years. That is largely because existing homeowners are locked into low mortgage rates and are not eager to sell.

That makes new homes more tempting and, in many cases, more accessible. Builder incentives can help you get into a home you otherwise could not afford. That is not a bad thing. But you need to see clearly how those deals are structured.

Second, do not assume every national builder is the same. Some genuinely lean into more attainable price points and smaller plans. Others push upgrades and premium communities. The more you understand their business model, the smarter your decisions become.

Third, shop the financing. Builder affiliated lenders can be convenient, and sometimes they really do offer the best deal because of how incentives are structured. But you only know that if you compare their offer with at least one or two independent lenders.

What It Means For Homeowners And Local Markets

If you already own a home, especially in a market with heavy builder presence, this new landscape has different implications.

On the positive side, disciplined production and strong pricing can help support your property value. Big builders do not like to undercut their own past sales, and that can create a floor in some neighborhoods, at least in the short term.

On the negative side, large waves of smaller, cheaper new homes nearby can cap the upside for older existing homes that need updates. If a buyer can get a brand new, efficient home with incentives for a similar price to your dated listing, your negotiating power shrinks.

Local governments have a role to play here too. When city councils and planning boards decide what can be built and where, they are indirectly deciding who can participate in the building business at all. Rules that make it easier for smaller projects, infill development, and “missing middle” housing to pencil out can create room for more local competition instead of leaving everything to a few nationals.

Key Takeaways

Frequently Asked Questions

Final Thoughts

It is tempting to look for a single villain or a single fix in the housing story. The truth is more structural. A concentrated group of national builders, a tight grip on land, incentives that protect listing prices, and layered policy barriers all interact to shape the market you see.

That does not mean you are powerless. It does mean you need to understand the rules of the game as they are, not as you wish they were. When you see a “special rate” or a shiny new subdivision, you will know what is happening behind the scenes and how to decide if it is actually a good move for you.

The reality for most markets is a slow grind rather than a quick reset. But clear information and realistic expectations are still leverage. The more you understand how a handful of builders ended up steering so much of America’s new housing, the better equipped you are to navigate the next decision you make with your own address.

Sources (footnote style)

National Association of Home Builders; Eye On Housing builder share and metro concentration analyses.

ResiClub Analytics summaries of finished lot purchases and public builder land strategies.

American Economic Liberties Project research on homebuilder margins and capital discipline.

Zillow and HousingWire coverage of the US housing deficit and completions.

Redfin and National Association of Realtors data on new construction share of inventory and price gaps.

NAHB and industry reporting on tariffs, material costs, and construction labor conditions.