Dive Brief:

• Greenwood Village, CO–based homebuilder Century Communities and San Jose, CA–​based developer and builder UCP have announced plans to merge. The combined business will have a market cap of more than $700 million, with $1.3 billion in revenue and $1.2 billion in inventory. 

• Together, Century and UCP have 117 communities across 10 states (California, Colorado, Georgia, Nevada, North Carolina, South Carolina, Tennessee, Texas, Utah and Washington) and 17 markets. The increased scale brings ownership or control of about 25,000 lots.

• The deal, valued at $336 million, will be complete in the third quarter of 2017.

Dive Insight:

Following a below-average 10 mergers and acquisitions in 2016, housing experts are predicting an upswing in activity this year, thanks to more stable markets and better access to financing, Builder magazine reported. Consultant Michael Kahn told the publication that drivers include the age of leadership at private building companies, the entry of eager new buyers and an uptick in Chinese builders looking to invest in the U.S. market.

Another factor that could drive an increase in M&A activity this year is the slowing of acquisition, development and construction loans and the difficulty private builders are facing in getting capital. Builder points to Century’s own activity as an example: Its acquisition of a 50% stake in Wade Jurney Homes last year gave the entry-level Carolina builder further growth support. 

Confidence in homebuilding companies is high, with experts predicting three years, if not more, of unit growth ahead. Meanwhile, building industry stocks posted a strong first quarter.  

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