This article was updated on Oct. 3, 2014.
America's biggest problem right now continues to be unemployment.
Officially, 5.9% of Americans are unemployed. But once you factor in the people who only have part-time positions and those who have left the labor force out of discouragement, the number is considerably higher.
What's the solution?
While this has been an important question for the past six years, there's no easy answer to it. Economists on the left argue that additional fiscal stimulus is needed. Those on the right say that regulations and structural issues are impeding the recovery and should therefore be removed.
Either way -- though, for the record, I tend to fall into the former's camp -- one thing is certain: The one sector that has more power to help than any other is housing.
As my colleague Morgan Housel discussed, it's estimated that between 2.1 and 3.05 jobs are generated for every home built in the United States. Thus, if there's any sector investors and analysts should be watching right now, its homebuilding.
With this in mind, the following chart reveals the five biggest players in the field by the number of units sold during the most recent quarter.
As you can see, D.R. Horton (DHI 3.63%) is far and away the largest. In the three months ended June 30, it sold a total of 7,676 homes, helped in large part by a massive increase in the first half of 2013, when sales shot up by 34% on a year-over-year basis.
The runner-up is Lennar (LEN 2.91%) which sold 5,457 homes over the same time period, followed by PulteGroup (PHM 4.10%), NVR (NVR 0.51%), and KB Home (KBH 4.53%) with sales of 3,798, 2,943, and 1,793 units, respectively -- though, it's important to point out that Lennar and KB Home's most recent quarters ended Aug. 31.
One of the explanations for the variation is the average selling price. D.R. Horton moves so many houses because its units are the cheapest, selling for an average of $272,277 last quarter, compared to more than $320,000 for the others. The highest average price among the five goes to NVR, at $368,000.
Another reason has to do with the geographic areas in which theses companies market their homes. KB Home derives most of its revenue from the West Coast, NVR from the Mid-Atlantic, and D.R. Horton from the South. Lennar gets a plurality from the East Coast, and Pulte from the Northeast and Southwest.
At the end of the day, given the role of the housing sector in the overall economy, these are important statistics for analysts and investors to watch. Not only will they give you insight into the homebuilding sector itself, which is ripe with investment opportunities, but they could also help you see what's coming down the road in the broader economy.
