Japanese Company Quietly Becomes America’s Fifth-Largest Homebuilder
Source: Realtor.com, Keith Griffith
Photo: Courtesy of Richmond American Homes via Realtor.com
Leading Japanese homebuilder Sekisui House is quietly expanding operations in the U.S., bringing new investment and innovation to a home construction sector that is racing to keep pace with demand.
Last January, Sekisui House acquired major U.S. homebuilder MDC Holdings, which builds single-family homes under the name Richmond American Homes, in a $5 billion cash deal.
Sekisui House also owns American subsidiaries Woodside Homes, Holt Homes, Chesmar Homes, and Hubble Homes. Together, the company estimates those subsidiaries will deliver 15,000 new homes annually across 16 states.
It would make Sekisui House the fifth-largest builder in the United States by units, based on 2023 completion statistics compiled by trade publication ProBuilder. While Sekisui House’s construction stats remain far behind the biggest U.S. builders such as Lennar and D.R. Horton, the company’s quiet expansion has made it a significant player in the U.S. market.
In Japan, Sekisui House is a high-end builder focused on custom homes, and the country’s No. 2 builder by revenue. But with Japan’s housing market decelerating due to a rapidly aging and shrinking population, the company has turned to America to expand its opportunities for growth.
Sekisui House CEO Yoshihiro Nakai said last year that the MDC acquisition “marks a significant advancement of our strategy to expand in the U.S. and bring the value of our philosophies and technology to U.S. homebuilding.”
He added, “We believe that we can become a one-of-a-kind entity in the U.S. by combining Japanese and U.S. technologies and, above all, sharing our passion for providing quality housing.”
Sekisui House plans to train U.S. construction workers in new skills
As soon as this month, Sekisui House plans to send a team of 20 experts to the U.S. to begin training local contractors such as carpenters, marking the company’s largest overseas training program to date.
The company hopes the new training program will help it grapple with a labor shortage that has plagued the U.S. homebuilding industry. The National Association of Home Builders says the country needs thousands of new skilled construction workers to address a housing shortfall of some 1.5 million units.
In Japan, homes are typically built with far fewer workers than in the U.S., in part because Japanese construction workers are multidisciplinary and trained in a variety of key tasks. A Financial Times analysis from 2017 found that the average Japanese construction worker produces about 37% more new homes each year than the average U.S. construction worker.
Now, Sekisui House is exploring how it could bring elements of the multidisciplinary construction worker approach to the U.S. through its new training program.
“Homebuilders may compete for labor, so having multiskilled workers is one of the initiatives we want to consider most,” Nakai has said, according to Japanese news outlet Nikkei Asia.
However, it remains to be seen whether the Japanese approach to homebuilding will translate to the U.S., where builders are constrained by thickets of regulations, and union rules often strictly prescribe which tasks must be performed by members only.
“Sekisui will face the same fundamental challenges that other U.S. builders are facing, namely high input costs (like land, labor, and lumber), regulatory hurdles, and weakened buyer demand in the current environment of high mortgage rates,” says Realtor.com® senior economist Joel Berner.
“Sekisui may have some advantages as well, from a lower cost of capital than American builders that allows them to keep prices competitive, to a differentiated product from American builders that may attract buyers,” he adds. “Another opportunity for Sekisui to flex its financial muscles as a large international company may be to offer preferred financing directly to homebuyers in the form of mortgage rate buy-downs or below-market rates.”
Will Americans embrace Japanese home design?
For now, Sekisui House continues to operate its U.S. subsidiaries under their original brands, offering homes built in the same style and with the same methods as they have been in the past.
But as time goes on, the company plans to add new offerings and test the U.S. appetite for homes constructed with Japanese technology and design influences.
According to Nikkei Asia, Sekisui House expects to build 20,000 units in the U.S. in the year ending January 2032 and hopes that its Shawood line of Japanese-style wood houses will account for 3,000 of them.
The Shawood home line adjusts the structure of the home to its local environment and climate, controlling sunlight and airflow to reduce heating and cooling costs. The homes also focus on the use of advanced insulation material and “airtight” construction methods to boost energy efficiency.
However, the Shawood homes use framing techniques that require precision joining down to the millimeter. That level of precision will require special training, and it remains to be seen whether U.S. construction workers will embrace the new training and techniques required for the Shawood line.
Regardless, the MDC acquisition signals that Sekisui House is serious about expansion and investment in the U.S. market, which the company’s financial results show is a rapidly growing part of its total business.
For the first nine months of 2024, Sekisui House reported about $5 million in revenue from overseas sales. That was up 156% from a year earlier, and accounted for about 30% of the company’s total revenue, up from just a 15% share last year.
“It’s always great to see increased investment in homebuilding in the United States,” says Berner. “The housing supply gap is one of the most important domestic issues of our time, and if we’re serious about providing safe, affordable, sustainable places for American families to live, then we invite Sekisui House to show us what it can do.”
Keith Griffith is a journalist at Realtor.com covering housing policy, real estate news, and trends in the residential market. Previously, his work has appeared in Business Insider, The Street, the Chicago Sun-Times, the New York Post, and the Daily Mail, among other publications. He has a master of arts degree in economic and business journalism from Columbia University.
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