Both D.R. Horton Inc. and Lennar Corp., the two biggest U.S. homebuilders by market capitalization, said the materials shortages and higher prices that occurred in the wake of the pandemic are preventing them from meeting prior delivery guidance.
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"The supply chain for both land and construction is significantly stressed and that will continue into the fourth quarter and beyond," said Lennar Executive Chairman Stuart Miller on the company’s third-quarter conference call on Tuesday.
Homebuilders have since the reopening of the economy grappled with supply chain disruptions that resulted in materials shortages and skyrocketing costs amid a period of strong demand for building projects.
Categories most impacted at the national level include engineered wood, windows, glass doors, paint and vinyl siding, according to Lennar co-CEO Jon Jaffe.
He added that regional problems include brick and lumber capacity in Texas, concrete block in Central Florida, insulation in north and southwest Florida, and severe labor constraints in Phoenix and Minnesota.
Lennar delivered 15,199 homes in the quarter ended Aug. 31, about 600 below the low end of its guidance. The company also lowered its fourth-quarter delivery guidance to about 18,000 homes.
The warning from Lennar comes a day after rival D.R. Horton lowered its outlook for homes closed and revenue in the current quarter due to "shortages and delivery delays in certain building materials along with tightness in the labor market."
The Arlington, Texas-based homebuilder on Monday updated its guidance and said it expects to close on between 21,300 homes and 21,700 homes in the fourth quarter, down from its previous range of 23,000 homes to 24,500 homes.
Fewer homes closed caused the company to also reduce its revenue forecast to a range of $7.7 billion to $7.9 billion compared to the prior range of $7.9 billion to $8.4 billion.
While homebuilders remain concerned that supply chain issues could persist, they are beginning to see some relief.
Lumber prices, which had surged by as much as 500% earlier this year, are starting to ease. The decline is a welcome sign to Lennar, and other builders, who saw costs jump by $5.40 per square foot in the third quarter. About 95% of the increase was due to lumber.
The drop in the price of lumber and other materials is already showing up in builder sentiment surveys. The National Association of Home Builders (NAHB) said in a report released Monday that sentiment ticked up one point in September as materials prices eased.
Still, the NAHB, like the homebuilders, warned supply chain issues were likely to persist for the foreseeable future.
"Delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers," said NAHB Chairman Chuck Fowke.