What are the 10 best home builders in California? Generally speaking, the housing market is a very important metric that determines the health of the economy. The better the state of the economy is, the more people there are with good jobs that can afford to buy a house. Moreover, alongside clothing and food, housing represents one of the basic needs of any human, so home-building companies satisfy a very important need and their revenue is generated by households’ largest investments.
The U.S housing market seems to be in pretty good shape, despite a small slowdown in the number of housing starts in March. According to the Commerce Department, the number of new housing starts in March declined by 6.8% to a seasonally adjusted annual rate of 1.22 million units. However, the number of building permits increased by 3.6% on the back of a 13.8% surge in multi-family houses. Mortgage rates have started to increase with the Fed having raised the key interest rate, but the unemployment rate is holding steady under 5% and wage growth offsets the effect of the higher costs of buying a house for households.
When it comes to California, the housing market is poised to grow. The state has a higher job growth rate than the average across the country, with non-farm jobs growth expected at around 1.9% this year, compared to 1.3% across the U.S. Unemployment is also near multi-year lows, with 2017 projections at around 5.4%. California’s housing market also has a supply issue, with the unsold inventory index (the time required to sell the remaining inventory) having amounted to 3.4 months in August 2016, according to the California Association of Realtors.
The number of houses sold and the median price of houses in California has also been going up. In 2017, 419,600 units are projected to be sold at a median price of $525,000, up from 416,300 units and $502,000, respectively, a year earlier. The sales volume and prices are expected to grow, as they are still below pre-recession levels.
With this in mind, let’s take a closer look at the 10 best home builders in California to identify companies that will benefit the most in case of market growth in the state. To compile the list, we looked at the largest home builders in the U.S according to Builder Online, (see the 10 best rated biggest home builders in USA) then used data from their latest 10-K reports to identify how many houses they sold in California or the regions that included California.
Some companies, like Beazer Homes USA, Inc. (NYSE:BZH), PulteGroup, Inc. (NYSE:PHM), and D.R. Horton, Inc. (NYSE:DHI) don’t present the number of houses they sold in California separately, but include the data in their reporting segment (usually West) alongside other states. On the other hand, companies like M.D.C. Holdings, Inc. (NYSE:MDC), KB Home (NYSE:KBH), and CalAtlantic Group Inc (NYSE:CAA) present their figures for the California market separately. Therefore, we assume that the latter companies have a larger business presence in California than the former, even though the former have higher numbers of houses sold overall, though across the entire segment. Now, let’s see our list of best home builders in California.