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Homebuilders’ scale may not guarantee cheaper or faster lot builds
HousingWire argues that builders can spread overhead with more scale, but evidence such as SG&A per closing, margins, turns, and cycle time is needed to show lot level gains.
HousingWire says homebuilders often point to “scale” as a reason performance improves, but the article argues scale should be treated as a question rather than an automatic answer. It notes that even when volume rises, costs such as corporate personnel, technology, finance, land operations, sales infrastructure, and divisional management do not disappear when homes do not close.
The analysis says growth only helps if it delivers enough productive, profitable throughput to make the organization more productive, shifting the focus from “how big can we become” to “how much productive density do we need.” It argues that buying more land or adding communities is not the same as achieving productivity, because weak communities and bad land can worsen overhead and create future write downs.
HousingWire uses recent results from K. Hovnanian Enterprises to illustrate how scale can fail to protect profitability when demand weakens. The article states K. Hovnanian’s revenue fell to $705.7 million from $800.6 million a year earlier, adjusted EBITDA dropped from $77.1 million to $31.9 million, and SG&A as a percentage of revenue rose from 11.3% to 12.3%.
The piece also describes how some builders have substantial operating footprint, citing Century Communities’ fiscal 2025 delivery of 10,387 new homes and about $4.1 billion in total revenue. HousingWire says Century ended the year with 305 selling communities, more than 60,000 lots owned or controlled, and operations in more than 45 markets across 16 states.