This time is different. Often, that’s just not the case. But in homebuilding, now and for the foreseeable future, this time is different, changing from the ground up.

The U.S. homebuilding industry is rewriting its rulebook, transitioning from a land-first approach to a model where operational excellence and talent outrank land as the ultimate drivers of success.

As we speak, Lennar’s Millrose spin-off roadshow will lead to an open the morning of February 7, on the New York Stock Exchange, reflecting in large part homebuilding’s new rules for the land game.

As the nation's largest public builders embrace asset-light, land-light models — following the footsteps of pioneers like NVR Inc. and latter-day acolytes like Dream Finders Homes and Smith Douglas (SDHC) — a clear truth has emerged: to succeed, builders must focus on what they do best.

This means doubling down on core competencies like product design, construction velocity, marketing, and customer care while leaving the risks – and at least some of the rewards of land speculation – to specialized land banking partners. 

This seismic shift doesn’t just transform how builders acquire and manage land. It demands a complete rethinking of organizational priorities, team structures, and skillsets. As The Builder’s Daily has reported for over a year, the pivot to land-light models creates both massive opportunities and steep challenges for builders of all sizes. And, as FTS President Thomas Carpitella explains:

This isn’t just about land—it’s about the people who drive every part of the business. If your organization isn’t aligned, disciplined, and focused, this model will expose your weaknesses."

The Back-Drop

The Land-Light Pivot: A New Operational Era

 For decades, homebuilders relied on land holdings as both the backbone and a hedge for their business operations. But rising interest rates, land scarcity, and tightening credit markets have made the high stakes of land speculation increasingly unsustainable.

In response, the largest public builders — Lennar, D.R. Horton, and others — are leading the charge toward land-light models. These strategies focus on leasing, partnerships, and off-balance-sheet land banking arrangements that free up capital and reduce exposure. 

Explainer: Land Banking 101

Land banking partners acquire and hold land for future development, acting as go-between resource pools that manage entitlement, zoning, and holding costs. Builders then repurchase the land on a “take-down” schedule aligned with their production plans and needs.

As Carpitella notes,

Land banking isn’t just an option anymore — it’s the future. If you’re not aligning your operations with this model, you’re not just behind the curve; you’re at risk of falling out of the game entirely."

Why Land Banking? Why Now?:

• Efficiency: Builders free up capital resources for operational improvements and growth.
• De-Risking: Flexible agreements reduce exposure during market downturns.
• Operational Agility: Preset take-down schedules ensure smoother construction and sales cycles.

A Shift in Talent Priorities

This operational pivot has profound implications for how builders structure their organizations and recruit talent. As The Builder’s Daily reported in its analysis of the 2024 FTS Compensation Report, the demand for high-caliber professionals — particularly in land acquisition, finance, and operations — has been surging.

FTS Insights on Talent Needs:

• Land Expertise: Builders are hiring aggressively to secure talent with deep local knowledge and entitlement experience.
• Strategic Financial Leaders: CFOs and VPs of Finance must now navigate off-balance-sheet strategies and complex partnerships.
• Operational Excellence: Faster build cycles demand construction managers who can deliver precision at scale.

In late 2023, The Builder’s Daily highlighted this trend in its feature, “Homebuilding’s Top 10 Trends for 2024,” quoting Carpitella:

Builders are leveling up, adding headcount in land acquisition and finance to position themselves for aggressive growth. They know their strategies are only as good as the teams executing them."

Lennar’s Millrose: A Case Study in Land-Light Strategy

Perhaps the most ambitious example of the land-light pivot is Lennar’s Millrose spin-off into a Real Estate Investment Trust (REIT). By transferring its vast land holdings into a separate entity, Lennar has created a model in which land speculation and development are handled independently while the core business remains focused on building and selling homes.

This model allows Lennar to reduce its capital-intensive burden, while still ensuring a steady supply of lots. However, as Carpitella points out, this approach demands an entirely different mindset across the organization:

Lennar’s Millrose REIT shows what’s possible when a company fully commits to operational excellence. But this only works if the entire organization—from sales to construction to customer care—is aligned around inventory velocity and customer satisfaction." 

Ahead of the Curve

For over a year, The Builder’s Daily chronicled this transformation, emphasizing the strategic importance of operational agility, cross-functional alignment, and talent development. In December 2023, we wrote:

The land game’s new rules require players to recognize, value, and execute predictively across the entire value cycle—from entitlement to sales. This is no longer about betting on land; it’s about building teams that can drive end-to-end excellence.”

This perspective has become even more relevant today. Builders that embrace this holistic approach will weather the turbulence of 2025 and emerge stronger and more competitive.

Talent: The Ultimate Differentiator

 In a land-light world, talent has become the most critical resource. Builders who prioritize hiring, training, and retaining top professionals will have a distinct competitive edge.

The 2024 FTS Compensation Report reveals significant year-over-year salary increases for high-demand roles, particularly in land acquisition and operations.

• Land Roles: Salaries rose 12-15% in 2024 as builders competed for scarce expertise in entitlement and deal structuring.
• Operations Leadership: Compensation for operations managers climbed 10%, reflecting their critical role in optimizing build cycles.
• Sales and Marketing: As affordability pressures mount, strategic marketing leaders are driving buyer engagement and sales velocity.

 Carpitella underscores the urgency:

Builders must treat their people as their most valuable investment. The companies that win will be the ones who build talent pipelines as robust as their land strategies."

2025: A Year of Reckoning

The shift to asset-light, land-light models marks a pivotal moment in U.S. homebuilding. Builders who succeed will be those who:

1. Embrace systemic, cross-functional operations.
2. Invest in top talent with the skills to navigate complex land-light strategies.
3. Align their entire organization around profitable inventory turns and exceptional customer experiences.

Carpitella sums it up:

This is a winnowing stretch for the industry. Builders who adapt now will thrive. Those who don’t may not survive."

This time is different.