For much of 2025, the new-home market has been stagnant.
The spring selling season saw slower-than-usual activity, and many public builders have cited market challenges during earnings calls with investors. The Zonda Market Ranking (ZMR) has rated the national market as “average” in the first six months of the year.
Yet amid the stagnation, delivery volume declines, hesitant buyers, and elevated interest rates, one element of the housing economy has remained active: mergers and acquisitions (M&A).
“The M&A market is still going strong. Publics, instead of saying we are going to miss unit delivery goals by X percent, are still very interested in doing M&A,” Margaret Whelan, founder and CEO of Whelan Advisory, tells BUILDER.
To date in 2025, public builder Dream Finders Homes has participated in two deals while Landsea Homes has been sold to private equity-backed New Home Co. In addition, Drees Homes, Defy Investments, Davidson Homes, Eastwood Homes, Scott Felder Homes, and Keystone Custom Homes have completed acquisitions. These deals are happening despite the absence of one of the most critical elements to any transaction: certainty.
“A buyer can be very comfortable paying a big premium or a high multiple for a company because they know when they close the deal in three months that the growth momentum they’ve been underwriting is going to be perpetuated and continue. Right now, it’s almost the opposite of that,” Whelan says.
With uncertain outlooks, the inclusion of earn-outs—agreements where part of the purchase price is contingent on the target company’s future performance after the acquisition—are bridge valuation gaps and get deals across the finish line.
“Often in times of uncertainty, it’s an earn-out that bridges the gap between a buyer and seller on valuation,” Whelan says. “The buyer says ‘I know you want two times book value. I’ll give you two times, but I’ll give you 1.5 up front and then you need to work for a couple years until we are aligned on the value to get the rest.’”
Seller’s Market
Despite a challenging market environment for home builders and uncertainty around future volume growth, the M&A landscape remains skewed toward the sellers, Whelan says.
“We are still seeing that smaller private companies are selling at a premium to the bigger, more liquid companies,” Whelan says. “That is just a function of supply and demand. The Japanese buyers are still very strong. Several of the well-positioned public buyers are still very strong, taking advantage of the ebbs and flows in the market.”
Japanese companies—including Sekisui House, Daiwa House, Sumitomo Forestry, and Misawa Homes Co.—increased market share by 5% on the 2025 Builder 100 list compared to the previous year.
“The Japanese are very focused on the U.S. market, nothing has changed. They have the extra market share on M&A on an absolute basis in terms of how many deals they are buying, and also they are growing into these new cities,” Whelan says. “In the Local Leaders data and the Builder 100 data, they are moving quickly up the list.”
Market Consolidation
The rate of M&A activity continues to consolidate market share among the largest builders. Since the beginning of 2024, 26 private builder acquisitions have been recorded, highlighting both increased competitive pressure and attractive exit opportunities for private builders. As a result, acquiring companies—including many of the biggest public builders—now control a growing portion of the market.
The top ten builders on the Builder 100 now account for a 45% market share, up 14 percentage points from 2019. For context, in 1994, the top ten builders held just 10% of market share. Among the top 50 markets in the 2025 Local Leaders list, the top ten builders collectively account for 75% of closings.
As many top builders are already active in the largest markets, there has been a growing interest in expanding into secondary and tertiary markets. For example, Lennar’s 2024 acquisition of Rausch Coleman expanded the builder’s portfolio into new markets in Arkansas, Oklahoma, Kansas, and Missouri. Similarly, Meritage Homes’s 2024 acquisition of Elliott Homes added a presence for the company in Mississippi, Alabama, and Florida panhandle markets in the Gulf Coast region.
Whelan suggests Southeast and Midwestern markets will likely be popular expansion destinations for acquiring companies in the near-term future.
“Places like Savannah, Columbia, and Greenville. These are cities where there is a lot of in-migration, relatively speaking,” Whelan says. “They are not massive cities, not 50,000 permits a year, but they are steadily growing and there is market share available.”
“Indianapolis is [also] very strong. There is a huge amount of interest in that part of the country for the same reasons that the Southeast is attractive: Housing is very affordable,” Whelan says.
