Japan now controls 6% of US homebuilding – and it wants to keep expanding

Japanese homebuilders are quietly staking a bigger claim in the US — and they’re no longer fringe players.

After years of small, under-the-radar deals, a surge of acquisitions has pushed Japanese firms to the brink of controlling about 6% of American home construction, marking a sharp shift in who is shaping the nation’s housing pipeline. 

Since 2020, they have struck 23 deals for US single-family builders, which is more than double the pace of the prior seven years, while also scooping up multifamily developers and supply companies along the way, according to several press releases.

“It started small,” John Burns, chief executive of John Burns Research and Consulting told the Wall Street Journal. “But Japanese corporations tend to play the game with a very long mindset.”

That long game is unfolding at an unusual moment. The US housing market is cooling under the weight of languishing elevated mortgage rates, with buyers pulling back and builders struggling to move inventory. Policy uncertainty is adding another layer of pressure, as efforts to curb institutional investment in single-family homes threaten one of the industry’s key exit strategies.

But for Japanese firms, even a sluggish US market looks far more attractive than conditions at home. Japan’s population has been shrinking for years, with a declining birthrate and rapidly aging demographic eroding housing demand. 

That imbalance has pushed major builders to hunt for growth abroad, with the US — large, undersupplied,and still expanding — emerging as the most compelling target.

“Japan’s population is shrinking,” Toru Ishii, board director and senior managing officer at Sekisui House, speaking through a translator, told the Journal. “Compared to that, the US market in terms of its scale and also its potential is still very appealing.”

The deals themselves are getting bigger and more consequential. In one of the most striking moves, Sumitomo Forestry agreed to acquire Tri Pointe Homes for $4.5 billion, a deal expected to vault the company into the ranks of the top five US builders. Sekisui House made a similarly bold play with its $4.9 billion purchase of M.D.C. Holdings, positioning itself just behind.

While foreign builders from Canada and Australia have long had a presence in the US, none have expanded as aggressively as the Japanese, Burns said. Their advantage often comes down to capital. With borrowing costs lower in Japan, these firms can afford to pay more, and win, when competing for deals.

“The Japanese are often the highest bidder,” Margaret Whelan, Chief Executive Whelan Advisory, told the outlet, noting they frequently outpace even giants like Lennar and D.R. Horton.

Yet their approach differs from the typical private-equity playbook. Rather than overhaul operations, Japanese buyers tend to leave management teams in place, allowing companies to run largely as they did before, just with deeper pockets behind them.

“They’ve relied on our local expertise and given us room to operate as we see best,” said Gregg Nelson, whose firm sold a majority stake to Daiwa House and who continues to run the company as co-CEO.

That hands-off style, combined with patient capital, is allowing some builders to keep investing even as others pull back. JPI, a multifamily developer acquired by Sumitomo, is continuing to pursue projects in oversupplied Sun Belt markets where competitors have retreated, betting that today’s weakness will translate into tomorrow’s market share.

“Sumitomo Forestry really takes a long-term view,” Mollie Fadule, JPI’s chief financial and investment officer told The Journal. “That has allowed us to continue to invest and expand when many are not.”

At the same time, Japanese firms are beginning to introduce elements of their homegrown building model, particularly in factory-based construction. While most US homes are still built on-site, some companies are experimenting with prefabrication techniques that could eventually improve efficiency — especially in a slower market where builders are more open to change.

“If the economy was going gangbusters and all you had to do was stick a sign out in front of the house to sell it, no one would have any interest in Sekisui House technology,” Ishii said.