Home Builders Seen Tapping Public Market --- Plans by Taylor Morrison for an IPO Could Signal Beginning of a Trend, as Housing Construction Continues to Surge
Plans by home builder Taylor Morrison to sell stock in an initial public offering could be the first in a wave of private builders going public, a trend that could alter the ranks of the nation's top builders.</br></br>Taylor Morrison, based in Scottsdale, Ariz., and which builds mainly higher-end homes in states from Florida to California, was a unit of British conglomerate Taylor Wimpey PLC until early 2011, when it was sold for nearly $1 billion to a group of U.S. private-equity funds. Last week, those funds filed a prospectus to sell $250 million of shares to the public.</br></br>Alex Barron, an independent analyst with the Housing Research Center in El Paso, Texas, said now is "an ideal time for a company like Taylor Morrison to consider going public," because investor appetite for builder stocks is strong and new-home sales and prices are on the rise.</br></br>The Dow Jones U.S. Home Construction Index, which tracks seven publicly traded builders, is up 70% so far this year, although it has given back some of its gains in the past month. Sales of new homes hit a four-year high in September, and the $237,700 median sales price of a new home in October was 7% higher than in 2010, according to the Census Bureau.</br></br>If Taylor Morrison's IPO is completed, the company would be the sixth-largest publicly traded home builder in the U.S. based on 2011 revenue, ahead of KB Home and behind Toll Brothers Inc. It also would be the first home builder to go public in more than 15 years.