America’s biggest problem right now is unemployment.
Officially, 7.6% of Americans are unemployed. But once you factor in the people who only have part-time positions and those who have left the labor force out of discouragement, the number shoots up to 13.8%.
What’s the solution?
While this has been the question of the hour, if you will, for the past five years, there’s no easy answer to it. Economists on the left argue that fiscal stimulus is needed. Those on the right say that regulations and structural issues are impeding the recovery and should therefore be removed.
Either way — though, for the record, I tend to believe the former — one thing is certain: The one sector that has more power to help than any other is housing.
As my colleague Morgan Housel discussed, it’s estimated that between 2.1 and 3.05 jobs are generated for every home built in the United States, so if there’s any sector investors and analysts should be watching right now, its homebuilding.
With this in mind, the following chart reveals the five biggest players in the field by the number of units sold over the past 12 months.
As you can see, D.R. Horton, Inc. (NYSE:DHI) is far and away the largest. Over the past year, it has sold a total of 24,493 homes, helped in large part by a massive increase last quarter, when sales shot up by 34% year over year basis. The runner-up is PulteGroup, Inc. (NYSE:PHM), which sold 17,221 homes over the same time period, followed by Lennar Corporation (NYSE:LEN), NVR, Inc. (NYSE:NVR), and KB Home (NYSE:KBH) with sales of 14,506, 10,191, and 6,617 units, respectively.
One of the explanations for the variation here is the average selling price. D.R. Horton, Inc. (NYSE:DHI) moves so many houses because its units are the cheapest, selling for an average of $253,400 last quarter, compared to more than $270,000 for each of the others. The highest average price among the five goes to NVR, at $330,400.
| Homebuilder | Average Sales Price |
|---|---|
| D.R. Horton, Inc. (NYSE:DHI) | $253,400 |
| PulteGroup, Inc. (NYSE:PHM) | $287,000 |
| Lennar Corporation (NYSE:LEN) | $271,000 |
| NVR, Inc. (NYSE:NVR) | $330,400 |
| KB Home (NYSE:KBH) | $271,300 |
Source: company filings.
Another reason has to do with the geographic areas in which theses companies sell. KB Home derives most of its revenue from the West Coast, NVR from the Mid-Atlantic, and D.R. Horton, Inc. (NYSE:DHI) from the South. Lennar gets a plurality from the East Coast, and Pulte from the Northeast and Southwest.
The article The Nation’s 5 Largest Homebuilders originally appeared on Fool.com and is written by John Maxfield.
John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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