The region's No. 1 and No. 2 homebuilders could be on the verge of a merger, according to construction industry insiders.
Western Pennsylvania's largest homebuilder, Reston, Va.-based NVR Inc. -- parent company of Ryan Homes -- may be close to sealing a deal to either buy or merge with Farmville, Va.-based Heartland Homes, said Jeff Burd, president of Tall Timber Group, a Ross-based company that tracks new construction.
"There's definitely something going on," Mr. Burd said. "There isn't this much interest and action around something if there's nothing going on."
Neither Matt Rost, president of Ryan Homes, nor Marty Gillespie, president of Heartland Homes, returned telephone messages Wednesday seeking comment.
Information provided by RealSTATs, a South Side real estate information service, shows that over the past five years NVR has, to date, sold 2,648 new homes in this region, generating $740 million in revenue. Heartland Homes has sold 1,603 homes, generating $543 million in revenues during the same time frame.
Adam Rudiger, an analyst for Wells Fargo, also reported Wednesday that NVR could be in negotiations to acquire Heartland Homes. He said the acquisition could offer NVR a significant competitive advantage in the Pittsburgh market.
Pittsburgh was NVR's third-largest market in 2011, according to Builder Magazine.
New homes sales for the region are up compared with last year's sales.
In October, NVR Homes and Heartland each increased their monthly sales totals by 11 units compared with October 2011, with NVR rising to 64 units from 55 and Heartland going to 35 from 24. Maronda Homes almost tripled its October 2011 output of 12, selling 33 units in October, according to RealSTATs.
The average price of a new home in the region stood at $305,203, while the median price clocked in at $286,155, representing year-over-year increases of 2.6 percent and 7.8 percent, respectively, RealSTATS reported.
Mr. Burd said that while it would take time to digest the significance of the two homebuilding giants joining forces, he anticipates such a merger would not have a significant impact on home prices from a consumer standpoint.
"If they do what people are afraid of and raise prices, other builders will possibly gain an edge," he said.
Some of the other big builders in the Pittsburgh region include No. 3 Maronda Homes, S&A Homes, Dan Ryan Builders and Horizon Properties.
"It could be a merger or a strategic buy," Mr. Burd said. "If, indeed, there is a deal, I don't think whatever form it takes we will see a tangible material impact on the market."businessnews
Tim Grant: email@example.com or 412-263-1591.