Why giant homebuilders are sticking with Sun Belt growth markets despite housing market weakness

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While many growth markets in Texas and Florida have seen some of the biggest power shifts toward homebuyers since the Pandemic Housing Boom fizzled out, Beazer Homes CEO Allan Merrill acknowledged at ResiDay 2025 last November that Beazer Homes—America’s 23rd-largest homebuilder—doesn’t plan to chase the relatively tighter housing markets in the Northeast and Midwest.

Instead, he said the builder plans to stay focused on growth markets in Texas, Georgia, North Carolina, and Florida, which—despite experiencing a greater post–Pandemic Housing Boom cyclical cooling—he expects will be long-term new-home demand winners driven by population growth.

Merrill pointed out that if homebuilders make investment decisions purely based on which housing markets are performing best in the short-term, then by the time those investments are made and the pipeline is ready to deliver homes in 2 to 4 years, local housing market conditions may have already shifted.

Here’s what Beazer Homes CEO Allan Merrill said at ResiDay 2025 on Friday, November 7, 2025 in New York City:

“You’ve pointed it out—your data doesn’t lie. Texas and Florida have been really tough [in 2025], and they were tough because inventory built. I think there was a lot of enthusiasm for the spring selling season that led to a lot of starts last fall and into the early part of the calendar year, [but] the demand didn’t materialize. So you start to see a lot of homes finished. And that puts pressure on buyers. It puts pressure on builders. It puts pressure on prices. And we saw all of that, particularly in Texas and Florida.”

“I think long-term. Where’s the job growth, where’s the wage growth? I think that there are some supply and demand dynamics right now that are favorable in those places [in the Northeast and Midwest]. But when we’re buying land, we’re 2 to 4 years out from delivering homes. I want to bet on where job growth, population growth and wage growth is.”

“I love our footprint. We’ve made decisions about why we are where we are, and we can grow our business substantially right where we are. There are places like Raleigh, like Nashville, that are in the Sun Belt and still have profound growth opportunities. Our home market of Atlanta is going to continue to be a big market. So there are plenty of places for us to grow within our footprint, without casting a longing glance to another city.”

“They [many Midwest and Northeast communities] are also very challenging markets from an entitlement perspective. So even if builders wanted to rush in, it’d be a minute before there was any real impact.”

The reason ResiClub resurfaced the commentary made by Beazer Homes CEO Allan Merrill at ResiDay 2025 is that it’s a reminder that when it comes to predicting where the most homes will be built over the next 5 to 10 years, it’s critical to examine population growth.

Indeed, ResiClub’s analysis finds a strong positive statistical relationship between population growth and single-family permitting across major U.S. metro area housing markets (R² ≈ 0.68), suggesting that high homebuilding activity largely concentrates in growth markets.

No region dominates homebuilding like the South, which is home to 39.0% of the nation’s population but generates 59.2% of all single-family permits. It makes sense given that the South is the epicenter of population growth.

Back on January 15, I had a call with outgoing KB Home CEO Jeffrey Mezger and incoming KB Home CEO Robert McGibney. During that call, I asked them the same question I asked Beazer Homes CEO Allan Merrill last fall: Given that many housing markets in the Northeast and Midwest remain tighter than core homebuilding markets in the Southeast and Southwest, would they consider expanding their presence into some of those tighter Midwest and Northeast markets?

Here’s what Mezger told ResiClub on January 15, 2026—weeks before the builder publicly announced he would transition to executive chairman, effective March 1, 2026:

“We position our company strategically, where we have a presence in the strongest growth opportunity cities. When I say growth, it’s population [growth], but also economic growth, job growth, pro business, good climates, where people want to live, desirable cities, and so they come and they go, and we keep the presence. Even if it’s a softer market [today], there’s still opportunity: Literally five miles apart in one city, you can have a totally different market dynamic. And in every one of our communities, even in red divisions right now, we are encouraging them to grow and make investment. In fact, here in the first quarter, we’re going to, as we conveyed on earnings call, we’re going to have the highest community count coming out of the first quarter. Of the first quarter we’ve had in the last six or seven years across the system. So our focus is to continue to grow market share in all of our markets. And while Denver is softer, as Rob [McGibney] mentioned, we have a presence, and we know what its potential is. And you navigate and optimize it, and then you take it on a run when the market conditions support it. So we wouldn’t opportunistically jump somewhere, because it’s good at this point in time when it could be not so good a year from now. We’d rather be consistent and really push the opportunities where we’re at.”

Of course, while many large homebuilders have made the decision to anchor down in growth markets and resist the urge to chase currently tighter Midwestern and Northeast pockets like Buffalo and Youngstown, that doesn’t mean they will maintain high spec levels in Sun Belt markets that are passing through home price corrections. Indeed, over the past 12 to 18 months, many large homebuilders have temporarily reduced their volumes in the weakest housing markets.

“We’ve seen [housing] starts come down year-over-year in many [weaker] markets . . . especially spec starts,” Mezger told ResiClub in January. “It’s good to see that there’s not a lot more inventory being injected into some of the softer markets, and I think that’s going to help places like Florida stabilize.”

KB Home says the pullback is helping limit further inventory pressure in markets like Florida, Phoenix, and Denver where “prices just ran up too much relative to incomes [during the Pandemic Housing Boom].”

The big picture

Ultimately, the split between softer Sun Belt markets and tighter Midwest and Northeast metros reflects current housing-market dynamics. But for giant homebuilders, market presence hinges more on long-term housing base growth fundamentals—population growth, income gains, and job creation—than just the current level of months of supply. That’s why many giant publics are slowing starts to a degree in softer pockets of Texas and Florida rather than pulling out entirely: the long-run demographic tailwinds in many Southern markets remain strong.

As for the Midwest, when giant homebuilder push in, they aren’t simply chasing the tightest markets right now. Instead, when they do expand there, it’s through selective moves—into metros like Indianapolis, Cincinnati, and Columbus. They’re looking for places with durable, multi-year growth prospects. Homebuilding is a 2- to 6-year pipeline business. By the time a new community delivers, today’s conditions may have shifted. Long-term outlooks matter.

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