Benzinga - Despite a sharp decline in homebuilder demand, Lennar Corp (NYSE: LEN) and NVR, Inc. (NYSE: NVR) have been able to gain market share in the housing market.
What Happened: According to a Monday note issued by BofA Global Research tracking quarterly market share of public homebuilders, net orders for major public homebuilders declined by 38% year over year in the fourth quarter, while new home sales declined by 21% year over year.
However, public builder market share has generally increased since 2015, analyst Rafe Jadrosich said, when the public builders held around 30% of share and reached its peak.
The note also showed that public homebuilders received around 43,900 net orders in the fourth quarter, coming in as the lowest level since the fourth quarter in 2018.
The 43,900 net orders represents a 10.7% quarter over quarter decline, and a significant decline from the 71,300 net orders received in the fourth quarter of 2021. The decline in new home demand can be attributed to higher mortgage rates and worsening affordability, while the industry wide market share gains can be attributed to diversification of product offerings.
Lennar maintained its position as the second-largest builder by market share, while NVR gained market share compared to the industry. D.R. Horton (NYSE: DHI) remained the largest builder by market share, while PulteGroup, Inc. (NYSE: PHM) and KB Home (NYSE: KBH) underperformed the industry.
Further, the BofA noted that spec builders gained share from build-to-order in 2022, as spec builders have increased incentives on completed quick move-in inventory.
Build-to-order builders have not introduced as many incentives as spec builders and instead have prioritized delivering their existing backlog.
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