Big builders boost market shareResale Homes ReportTHE NATION’S HOUSING

WASHINGTON -- There is no question that 2006 was a tough year for the home-building business. But not necessarily for the nation's 100 largest residential building companies.

Together, the top 100 increased its market share from 36.6 percent to 43.6 percent, according to Builder, a trade journal. This occurred despite a decline of 231,000 overall sales in the new-home sector, from 1,380,000 million units in the previous year.

This isn't to say the big boys didn't have some tough sledding last year, just like everyone else. But just 10 years ago, the 100 largest builders commanded only a 28 percent share of a market that was 291,000 units shy of the 1,149,000 that were sold in 2006.

The largest builders, the vaunted top 10, registered the largest gains last year, boosting their portion of the new-home market from 21 percent to 25.7 percent, Builder reported in a recent edition.

In other words, 10 builders now sell more than one in every four new houses built in this country, a percentage that was unthinkable only a quarter of a century ago.

Last year's top-10 builders, as ranked by the magazine in terms of closed sales were D.R. Horton, 53,410; Lennar Corp., 49,568; Pulte Homes, 41,487; Centex Corp.; 37,539; KB Home, 32,124; Hovnanian Enterprises, 20,201; Beazer Homes, 17,500; Ryland Group, 15,392; NVR, 15,139; and MDC Holdings, 13,123.

Among the group, four - Pulte, Beazer, Ryland and MDC - closed fewer deals last year than the year before. Of the other six, Lennar's sported the largest increase in sales: 17 percent.

The gods have conspired to send a large number of perspective home buyers to the sidelines. But home builders are pulling out all the stops to try to entice them back into the game.

A survey last month by the National Association of Home Builders (NAHB) found that just over half of its members have cut prices by 7 percent on average. And nearly three out of four builders say the price cuts have been "at least somewhat effective" in moving product or limiting cancellations.

A larger number -- almost 75 percent -- are offering non-price incentives to lure buyers, sometimes in combination with price cuts. The most frequently offered come-ons were free options and upgrades, paying the buyer's closing costs, absorbing up-front mortgage finance points, buying down the buyer's interest rate, helping buyers to sell their existing homes or offering trade-in programs.

Builders in Atlanta, Ga., seem to be particularly inventive. In an attempt to take the worry out of selling a current home, move-up builder Monte Hewett Homes is working with a firm that will cover buyers' mortgage payments on the old house for up to a year.

Another firm, the Providence Group, is offering to lend buyers its team of resale agents, who will help them put their current houses in the best selling condition possible. Among other things, the company will provide contacts for any services needed, including painters, plumbers, cleaners and handymen. Then it will "stage" the house to make it look model-home ready.

According to the NAHB, "high proportions" of builders rate these kinds of stimuli at least somewhat effective. But somewhat surprisingly, given the logical appeal of such an incentive, only about half of the small percentage of builders that are offering to match price reductions on future sales of the same models in the same communities said the ploy was successful.

Here's a new twist on home loans -- a savings account that pays the same rate as the rate you pay for your mortgage.

Under the Home Loan Savings Plan offered by Downey Savings, a Newport Beach, Calif., savings and loan, borrowers earn the same rate on their savings account as the pay on their note up to 10 percent of the loan's balance. So, if you have a $300,000 mortgage at, say, 6 percent, you'll earn the same 6 percent on the money you have in savings, up to $30,000.

Any balance that exceeds the 10 percent benchmark earns interest at the thrift's normal savings account rate. But there are no other restrictions. You can make deposits and withdrawals at will, and there is no penalty to close the account, so it is completely liquid.

The green-building movement is moving beyond the residential and office sectors to retail. To wit, Pizza Fusion, a Florida-centric franchise based in Fort Lauderdale, which sells organic and all-natural fast food and delivers it in company-owned hybrid vehicles that get 50 miles to the gallon.

The fledgling enterprise recently purchased 9,783 kWh of renewable-energy certificates to offset 100 percent of the company's electricity consumption in its corporate office and stores.

Lew Sichelman has been covering real estate for more than 30 years. He is a regular contributor to numerous shelter magazines and housing and housing finance industry publications.