What are the 10 best home builders in Texas? Texas is the second-largest state in the US with an area of 268,580 square miles. It also has the second-largest population with 27.86 million people and the second-largest gross state product of $1.63 trillion, (it trails California on both metrics). It’s also worth mentioning that Texas has one of the lowest tax burdens in the country, with average resident income tax rate amounting to 8.4%. In addition, Texas is one of the seven states that don’t have a state income tax, although there are some property taxes.
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Texas’s economy is dependent on oil production, but agriculture also plays an important role, as it has the highest agricultural acreage in the US and it generates the highest revenue from livestock and the second-highest revenue from agricultural products (also trailing California). Moreover, the state is trying to diversify its economy. It generates the most wind power in the state and has the largest wind farm in the world (Roscoe Wind Farm). Texas also has one of the largest incentive programs to attract new business.
Nevertheless, due to the state’s high reliability on oil, Texas housing market is one of the most dependent on the barrel prices in the US. As oil prices slumped last year, reaching as low as below $30 per barrel, home prices in Texas slid as well. According to The Wall Street Journal, in the Houston area, average price for a single-family home declined by 7.5% in December 2015, after having hit record prices just earlier that year. This led to home builders and sellers to cut prices and provide more incentives for buyers.
However, as oil prices have been on a rebound and the Fed keeping interest rates low enough to not scare people away from taking a mortgage, home prices in Texas have also been gaining ground. According to Zillow, home prices in Texas have gained 5.9% over the last year and the average price currently stands at around $163,500, which is lower than the US average of $196,500. The growth in home value in Texas is also lower compared to the 6.8% registered across the country. However, Zillow also estimates that over the next year, home prices in Texas will advance by 3.1%, compared to 2.6% in the US.
With this in mind, let’s take a closer look at the 10 best home builders in Texas. Out of many builders that operate in the state, we picked the largest publicly-traded companies in terms of the number of closings in 2015, according to Builder’s Top 100 list. From the list, we sorted the companies based on the number of houses closed in Texas, based on information from their latest 10-K reports with the Securities and Exchange Commission. However, some companies don’t report the information for Texas alone, but include the numbers as part of a reporting segment that might include other states.
10. Beazer Homes USA, Inc. (NYSE:BZH)
Beazer Homes USA, Inc. (NYSE:BZH) provides data regarding its operations in Texas as part of its West reporting segment, which also includes Arizona, California and Nevada. During the fiscal 2016 (ended September 30), the company closed 2,508 homes in the region, the most across segments. The average closing price amounted to $326,100 and Beazer Homes USA, Inc. (NYSE:BZH) also had 828 houses in the backlog heading into fiscal 2017.
9. Hovnanian Enterprises, Inc. (NYSE:HOV)
Out of the total 6,464 homes delivered in fiscal 2016 (ended October 31), Hovnanian Enterprise, Inc. (NYSE:HOV) sold 2,750 houses in the Southwest region, which includes Arizona and Texas. Southwest is the largest region in terms of home deliveries (figures for other regions are under 1,000 units). The average price per home sold by Hovnanian Enterprise, Inc. (NYSE:HOV) in Arizona and Texas amounted to $372,512.
8. Toll Brothers Inc (NYSE:TOL)
In Texas, Toll Brothers Inc (NYSE:TOL) has operations in Dallas, Houston, and Austin metropolitan areas. The state is part of the company’s South reporting segment, which aside from Texas includes Florida and North Carolina. In the whole region, Toll Brothers Inc (NYSE:TOL) closed 2,988 homes in fiscal 2016, ended October 31, and had 960 homes under contract but not closed.
7. KB Home (NYSE:KBH)
Up next on our list of best home builders in Texas is KB Home (NYSE:KBH) that sold a total of 3,774 homes in the Central region, which includes Colorado and Texas. In Colorado, the company operates in Denver, while in Texas KB Home (NYSE:KBH) builds houses in Austin, Dallas, Fort Worth, Houston, and San Antonio. The average selling price for houses in Central region in fiscal 2016 (ended November 30) amounted to $270,100 and KB Home (NYSE:KBH)’s gross profit margin was 19.6%.
6. CalAtlantic Group Inc (NYSE:CAA)
In Texas, CalAtlantic Group Inc (NYSE:CAA) has operations in Austin, Dallas and Houston. These cities, together with Denver (Colorado) and Las Vegas (Nevada) represent the company’s Southwest region, which registered 3,891 homes delivered in 2016, up by 10% on the year. The average selling price in the Southwest region stood at $426,000 and the region amassed 28% of the total number of CalAtlantic Group Inc (NYSE:CAA)’s delivered houses (14,229).
5. Lennar Corporation (NYSE:LEN)
Next in line in our list of 10 best home builders in Texas is Lennar Corporation (NYSE:LEN), which incorporates its data on the state in its Central reporting segment, which also includes Arizona and Colorado. During fiscal 2016, ended November 30, the company delivered 6,788 homes in the region, making it the second largest behind East (Florida, Georgia, Maryland, New Jersey, North Carolina, South Carolina, and Virginia). The average price of houses sold by Lennar Corporation (NYSE:LEN) in the Central region was $327,000 (the second lowest value behind East).
4. D.R. Horton, Inc. (NYSE:DHI)
In Texas, D.R. Horton, Inc. (NYSE:DHI), the number four on our list of best home builders in Texas builds homes in a number of cities, including Austin, Dallas, El Paso, Fort Worth, Houston, Odessa, San Antonio, and others. The state is part of the company’s South Central region, which also includes Louisiana and Oklahoma, although in these states D.R. Horton, Inc. (NYSE:DHI) has operations only in Baton Rouge and Lafayette, and Oklahoma City, respectively. The whole region registered 12,433 homes sold in fiscal 2016 (ended September 30) at an average price of $244,900 per unit. The only other region in which D.R. Horton, Inc. (NYSE:DHI) sold more homes is Southeast (13,616 units), while all other regions had sales well below 10,000 homes.
3. Taylor Morrison Home Corp (NYSE:TMHC)
Taylor Morrison Home Corp (NYSE:TMHC)‘s Central reporting segment includes Austin, Dallas, and Houston. The region had 2,050 closures in 2016, according to its last 10-K report, which made it the smallest of the three, with the other two being East and West, which include cities from more states. The average selling price of homes closed in Texas by Taylor Morrison Home Corp (NYSE:TMHC) amounted to $476,000. Overall Taylor Morrison closed 7,369 homes in 2016. And now, let’s see the top two on our list of best home builders in Texas.
2. Meritage Homes Corp (NYSE:MTH)
Texas is the only state that represents a separate reporting segment in Meritage Homes Corp (NYSE:MTH)‘s 10-K report. The Central region, which includes the state, had 2,130 houses closed in 2016, making it the smallest of the three regions (other two, West and East include many states). The average price of houses closed in Texas amounted to $365,700.
1. PulteGroup, Inc. (NYSE:PHM)
Out of a total of 19,951 houses PulteGroup, Inc. (NYSE:PHM) closed in 2016, the company had 3,726 closings in Texas alone. The company reports individual state data only for Texas and Florida, with other states being included in regional reporting segments. Texas was PulteGroup’s third-largest state in terms of the number of closings and the state registered an increase of 11% compared to 2015. The average selling price amounted to $277,000 and was the lowest across all regions. PulteGroup, Inc. (NYSE:PHM) also had 1,412 homes in Texas in its backlog at the end of the last year.
These are the 10 best home builders in Texas. The companies in the list had the largest numbers of home closings in the Lone Star state during their last fiscal years, although for some of them the data was taken approximately, since they don’t provide individual data on number of houses delivered in the state.