The home-building sector in the United States has faced an array of challenges, including natural disasters, a long-running labor shortage and increased regulatory costs. Now, two of the nation's biggest residential-construction companies are merging in hopes that their combined heft will help them counter those forces.

The Lennar Corporation said on Monday that it would merge with the CalAtlantic Group to form America's largest home builder in a stock-and-cash deal worth $5.7 billion. The deal would create a behemoth with around 240,000 building plots in 21 states, a market value of about $18 billion and combined revenue of $17 billion over the past 12 months.

Lennar and CalAtlantic anticipate reaping $250 million in annual cost savings and paying down debt obligations. But the deal will not alter a basic problem: The construction of new homes in the United States lags below historical averages.

A decade after the big housing bust dealt a blow to many smaller home builders, the industry's largest firms continue to grapple with higher regulatory expenses that make building homes -- especially starter homes -- too costly, some housing-finance experts said. The situation confounds some people, given the pressing need for affordable housing for young families.

What a perplexing situation -- no matter how the deck chairs are rearranged, normal folks are still too broke to buy even a modest home! Who could have foreseen this???

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