Apollo Global Management Inc. (NYSE: APO) is buying homebuilder The New Home Company (NYSE: NWHM) in a deal that values the target at $338 million. Pent-up demand for new homes, combined with low inventory, is leading to a big need for construction and building products, and private equity firms are showing keen interest. New Home focuses on building houses in California, Arizona and Colorado.

“As consumer demand for new homes accelerates amid limited supply, we continue to see exciting opportunities to invest in the residential housing market,” says Apollo partner Peter Sinensky.

Citigroup Global Markets Inc. and Latham & Watkins LLP are advising New Home. Paul, Weiss, Rifkind, Wharton & Garrison LLP and J.P. Morgan Securities LLC are advising Apollo.