Key Details:
- A recent Forbes article identifies 12 new billionaires or billionaire families in the homebuilding industry, each made wealthier by their company’s savvy response to America’s nationwide housing shortage.
- According to the National Association of Realtors (NAR), nationwide inventory is short by at least four million housing units.
- The S&P index of homebuilders has gone up 57% over the past 12 months. Shares of the nation’s largest, D.R. Horton, are up 70%, while stock values for luxury builder Toll Brothers have gone up 96%.
- With both presidential candidates calling for a substantial increase in new home production, the building boom doesn’t look like it’ll calm down anytime soon.
The housing market may be facing higher mortgage rates and surging home prices, but America’s homebuilders are thriving.
While prospective buyers struggle with affordability, homebuilders like Tom Bradbury of Smith Douglas Homes are capitalizing on the nationwide housing shortage. Since going public on the NYSE in January 2023, shares of Smith Douglas have gone up 56%, adding Bradbury to the ranks of billionaires making their mark in the industry. And he’s not alone.
A recent Forbes article revealed 12 new billionaires or billionaire families in the home building industry, including:
- Ryan Horton (D.R. Horton): $3 billion
- Reagan Horton (D.R. Horton): $3 billion
- Marty Horton (D.R. Horton): $1.5 billion
- Stuart Miller (Lennar Corp.): $1.8 billion
- Jeffrey Miller (Lennar Corp.): $1.4 billion
- Leslie Miller Saiontz (Lennar Corp.): $1.4 billion
- Kathy Britton (Perry Homes): $2.6 billion
- Bruce Toll (Toll Brothers): $2 billion
- Itzhak Ezratti & family (GL Homes): $1.9 billion
- Thomas Bradbury (Smith Douglas Homes): $1.7 billion
- Elly Reisman (Toronto-based Great Gulf Homes & Ashton Woods Homes): $1.4 billion
- David Weekley (David Weekley Homes): $1.1 billion
The S&P index for builders went up 57% over the last 12 months, with even bigger increases for the nation’s largest builder, D.R. Horton (70%), and luxury builder Toll Brothers (96%).
With presidential candidates calling for a substantial increase in new home construction, the homebuilding boom isn’t likely to slow down anytime soon. For one, builders have some advantages over existing homeowners in this market.
New homes are a great fit for buyers not willing (or able) to overpay for a home in need of repairs or upgrades. And builders with affiliate lenders can offer competitive rates, with or without mortgage rate buydowns, as well as other sales incentives that can knock down the cost of buying a home.
You put all that together and you have an environment that is solid and performing better than I think most economists would have expected.
Alan Ratner, an analyst at housing research firm Zelman & Associates, adds, “These companies are in the best shape they’ve ever been.”
Read on for a quick description of five different homebuilders and how they’re responding to the U.S. housing shortage:
- Smith Douglas Homes: Tom Bradbury’s company focuses on building affordable homes for lower-to-middle-class buyers in Southern growth markets like Nashville, Charlotte, and Raleigh. Using the SMART build system, which streamlines home construction processes, Smith Douglas Homes completes builds 20% faster than most of its competitors, reducing costs and delivering more homes efficiently.
- Dream Finders Homes: To keep homes affordable, Patrick Zalupski’s company eliminates certain high-end features, such as quartz countertops and wood floors, making them optional upgrades. This strategy, along with its focus on first-time buyers and move-up buyers, has enabled the builder to close 31,000 homes since 2009, driving sales growth to $3.7 billion in 2023.
- Lennar: Stuart Miller’s Lennar has responded to the housing shortage by introducing tiny homes, like the 660-square-foot houses (as wide as the driveway), which they’re having no trouble selling for as little as $137,000 in San Antonio. By focusing on affordable price points, Lennar has seen robust demand and a $52 billion market capitalization.
- Toll Brothers: Known for luxury homes, Doug Yearley’s Toll Brothers has pivoted to offer more affordable housing options. Since 2016, it has expanded its portfolio to include smaller townhouses and homes starting at $450,000. Forty percent of its sales now come from this lower price range.
- Perry Homes: While others focus on affordability, Kathy Britton of Perry Homes is targeting high-end buyers in Texas, offering customizable floor plans and luxe finishes. With in-house architects and design teams, Perry Homes is doubling down on superior quality and selective community building—especially in the Dallas and Houston areas.
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