The picture has to be national, because so many national builders are working in this region, either by acquiring local companies or moving in from New York or Washington. Eight of the top 10 U.S. builders are here, led by No. 1, D.R. Horton. A ninth, Ryland, builds in Delaware.
The list, in order after D.R. Horton, is: Lennar; Pulte; Centex; KB Homes, which is not building here; Hovnanian Enterprises, which has headquarters in Red Bank, N.J.; Beazer; Ryland; NVR; and MDC Holdings.
The ranking is based on closings and gross revenues in 2006 versus 2005. Half the builders on the list, including Horton, Lennar, KB, Hovnanian and NVR, saw percentage increases in both years from the single digits to the teens.
Centex closings were up 1 percent, while gross revenue was down 2 percent. Pulte was minus 9 percent in closings and down 3 percent in gross revenue. Beazer was down 5 percent in closings and 1 percent in gross revenue. Ryland was 8 percent lower in closings and 1 percent in gross revenue, and MDC was down 14 percent and 2 percent from 2005.
On the surface, it doesn't seem all that bad. But coming off the boom, a couple of percentage points in revenue can translate into a couple hundred million dollars.
To keep the damage to a minimum, many builders have sold land intended for new communities, reduced the number of speculative homes, and focused on higher-yielding regions less affected by the market downturn.
Toll Bros., based in Horsham, is No. 14 nationally in the rankings, exactly where it was in 2005, with a drop in closings of 2 percent but a revenue increase of 6 percent in 2006 over 2005, Builder magazine reports. Expansion into the Orlando, Fla., market yielded 422 closings in 2006, and the company has been successful in urban-infill construction, notably with Naval Square in Philadelphia.
Orleans Homebuilders of Bensalem moved to 42d place in 2006 from 38th in 2005, with an 18 percent drop in closings and 6 percent lower revenue. As a result of expansion to the South and Midwest by acquisition of other builders, 59 percent of the houses Orleans builds are outside the region. Builder magazine says the company is still planning to expand to Phoenix.
The second 100 on the list finds DeLuca Enterprises of Yardley at 128th, exactly where it was last year, with a 9 percent drop in closings from 2005 but a 10 percent increase in gross revenue.
David Cutler Group of Plymouth Meeting rose to 132d from 134th in 2005. Closings declined 7 percent from 2005, according to Builder, and revenues were 25 percent lower.
T.H. Properties in Harleysville was No. 123 on the 2005 list and No. 144 in 2006. Closings were 26 percent lower than in 2005, and gross revenues down 20 percent. (The complete list is at www.builderonline.com.)
From my conversations here and in other parts of the country, I've gathered that no one expects the current market to last very long. In fact, builders are busily making changes so they will be poised for recovery when it comes.
What's helped residential builders considerably over the last year or so has been incentive programs. Though offering such packages to keep the market moving has reduced gross revenues as well as net in many cases, it has moved lots of inventory and cut losses in the closings column.
It also has given builders a breather to consider what kinds of innovations the public is looking for. The word green appears more and more. In fact, in recent testimony to a congressional committee, Texas builder Ray Tonjes said that, thanks to code changes, "builders will be able to successfully adjust to the shifting market demand for greener homes."
Real estate is not a static business, but one that changes from day to day, and often from minute to minute. The vast majority of agents, brokers and builders understand that, and that, of course, is why they survive and thrive.
"On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472 or firstname.lastname@example.org.