D.R. Horton Inc. has long boasted of being the largest U.S. home builder. That is about to change.

Pulte Homes Inc. and Centex Corp. are expected to join forces later this year, creating a titan that strips Horton of a title, when measuring home sales closed, that it has held for seven consecutive years. This new leader should have more land lots, customer diversity and annual closings.

It is undoubtedly an ego blow, one that industry watchers said is fueling Horton's determination to emerge from the worst downturn in generations as a stronger company capable of maintaining the top spot. It is focused on avoiding bloated land holdings to prevent massive charges, targeting first-time buyers and maintaining its nationwide reach.

"A number of people have asked us about some transaction that's contemplated in the industry and how we feel about being No. 2," said Donald J. Tomnitz, Horton's president and chief executive, at a recent conference. "I would say to you that we plan on being the largest and most profitable builder."

Horton's strategy includes drastically shaving its lot count, going from almost 400,000 at one point to about 118,000, with about 95,000 of them owned. The expected Pulte-Centex combination would control nearly 190,000 lots, most owned. Horton is also pursuing a land-light model, which typically avoids lot ownership in favor of securing land with a small down payment or option and buying when ready for construction. The strategy could mean less profit but also less risk.

The builder is targeting first-time buyers because they do not have an existing home to sell and the government is offering a tax credit until Dec. 1. Horton is building smaller houses with fewer amenities and an average sale price between $200,000 and $210,000, one of the sector's lowest.

Pulte and Centex, by contrast, plan to continue targeting everyone from first-timers to retirees.

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