Builders Pay Howard Hughes $1.3 Million an Acre

In Las Vegas and suburban Houston, the dirt itself keeps getting pricier. Howard Hughes Holdings said homebuilders paid an average of $1.321 million per residential acre in its master planned communities in the third quarter, up from $786,000 a year ago, according to its Nov. 5 supplemental filing ^[2].

The catch is volume: the company closed just 101.0 acres, so residential land sales fell to $133.5 million from $274.3 million ^[2]. Master planned community pretax earnings dropped to $89.5 million from $205.0 million ^[1].

Inside the land bank

• The year-ago quarter included a bulk sale of 231 acres in Summerlin, and this quarter carried a $19.4 million loss tied to consolidating the Floreo venture in Arizona ^[1].
• Over 12 months, residential price per acre rose 18%, with 398.6 acres closed at an average of $1.092 million ^[2].
• Builders' net new home sales climbed 11% at Summerlin and 5% at The Woodlands Hills, while Bridgeland slipped 9% for the quarter ^[2].
• Summerlin's remaining 1,827 residential acres carry an estimated price of $1.995 million per acre, the highest in the portfolio ^[2].

But Howard Hughes is also stepping back from owning so much real estate. It plans to shift to an asset-light model through sales and joint ventures, and it sold two Texas utility district receivables for $177.6 million in cash at a $105.4 million GAAP loss ^[1]. Executive Chairman Bill Ackman told analysts that raising about $2 billion before 2027 ends is a reasonable estimate, though the shift likely will not be complete by then ^[3].

What it means for you

Land is a cost buyers pay for monthly. With the 30-year fixed rate at 7.18% in Freddie Mac's latest survey, every $100,000 of land cost folded into a home's price adds about $677 a month in principal and interest, by our math ^[4]. Pricier lots in top master planned communities can mean higher entry prices, or builders absorbing the cost through thinner margins.

Zoom out

Howard Hughes said its quarterly pricing update added about $79 million to its remaining land value, a sign that well-located lots are holding value even as affordability pressures the national housing market ^[2].