Shortages have created a 'traffic jam' in construction: Lennar | Dump Trucks Charlotte NC

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Columbus Ohio Dump Truck Company Brief:

• Lennar Co-CEO Jon Jaffe said Monday the entire homebuilding industry is facing labor constraints and shortages — particularly of "engineered wood, windows, garage doors, paint and vinyl siding" — that were limiting the company's ability to keep up with real estate demand.
• "They [shortages] are intermittent, and they are not over yet," Jaffe said on an earnings call. "In many ways, it's truly a game of whack-a-mole, creating a traffic jam. Like cars, the construction process is backed up, creating a chain reaction of delays that cascades from one trade to the next."
• Lennar, which is the nation's second-largest homebuilder, has increased lead times by as much as 7 times in some cases to give manufacturers additional flexibility, said Jaffe. Still, it expects constraints will continue "into the fourth quarter and beyond," especially as builders face a growing backlog of orders.

Dump Trucks Columbus OH Insight:

Although lumber and other material costs remain high, it’s shortages of labor and other key items that are delaying production for builders and biting into sales.

"While some building materials, like lumber, have seen easing prices, delivery delays and a lack of skilled labor and building lots continue to hold the market back," said Robert Dietz, chief economist for the National Association of Homebuilders, in a statement.

Lennar is building homes slower than expected, and builders across the nation are facing disruptions that "are affecting different trades at different times and in different geographies," according to Jaffe.

The columbus oh dump truck company delivered 15,199 homes in the third quarter, missing low-end estimates by 600. Larger rival D.H. Horton also cut its forecast for annual revenue, saying it expects to close up to 81,700 homes in the fourth quarter, compared to the previous estimated range of 83,000 to 84,500. 

The market has stabilized somewhat since the housing frenzy’s height last year as companies adjust to supply chain instability. Lennar has taken steps to increase visibility into the extent of shortages, working to increase lead time or in some cases bring in alternate manufacturers.

Prices for key materials including lumber have also eased somewhat. Builder confidence in September inched up for the first time in three months on lower prices and higher supply, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.

Still, demand for materials remains high. Sourcing for building materials on supplier platform Thomasnet.com is up 115% year over year according to an August statement, with demand for lumber-related categories up an average of 81% year over year.

So far, the explosive demand for housing has allowed builders to push up prices and recoup those higher material costs, with Lennar reporting a 19% increase in revenue year-over-year. But that could change, as shortages and production delays threaten to slow the frenzied pace of sales.

"Some are concerned that demand is slowing as prices move higher and interest rates move," said Jaffe. "It feels to us that sales are slowing because many sales were made early and the industry is building through those sales slower than expected."