Japanese HomeBuilders Pouring Into American Market

Japan’s biggest homebuilders are done testing the U.S. waters and are now diving into the market.

After years of low-profile deals, Japanese firms have accelerated their push, announcing or closing acquisitions of 23 U.S. single-family builders since 2020, the Wall Street Journal reported. The period saw more than double the pace of the prior seven years from 2013 to 2019, as firms also snapped up multifamily developers and construction supply companies.

The buying spree is quickly translating into market share, with Japanese companies on track to control roughly 6 percent of U.S. home construction, according to the Journal.

The expansion comes as U.S. builders grapple with a slowdown driven by high mortgage rates and wavering demand. For Japanese firms, even a cooling American market looks attractive compared to conditions at home, where a shrinking population and aging demographics have constrained long-term growth.

In February, Sumitomo Forestry agreed to acquire Nevada-based Tri Pointe Homes for $4.5 billion, a move that would make it the fifth-largest builder in the U.S. Sekisui House made headlines in 2022 with a $514 million deal for for Chesmar Homes, one of Texas’ largest homebuilders, and last year with its $4.9 billion purchase of M.D.C. Holdings, vaulting it into the sixth spot nationally.

Japanese firms often have a financial edge thanks to lower interest rates at home. That advantage has helped them outbid domestic giants like Lennar and D.R. Horton on multiple deals, according to industry insiders cited by the Journal.

Japanese buyers typically leave local management in place and operate subsidiaries with relative independence, a structure that has appealed to founders looking for capital without ceding control. Trumark Homes sold a majority interest of the company to Japan-based Daiwa House in 2020, attracted by its operational structure.

The expansion could reshape how many homes in the U.S. are built. Japanese companies are known for prefabrication and factory-built housing, a model still limited in the U.S.

Some acquirers are already introducing those techniques into their American operations, betting efficiency gains will have a bigger impact in a slower market. Sekisui House has already started to integrate prefabricated construction for some higher-end U.S. homes, though most of its homes in the U.S. will still be built on-site.

— Chris Malone Méndez