Largest U.S. Homebuilders Miss Delivery Projections Due To Materials 'Traffic Jam'

homebuilders, construction, construction industry construction workers

The combined issues of supply chain delays and labor shortages continue to wreak havoc on residential construction.

Lennar Corp., the second-largest homebuilder in the U.S. by volume, missed its lowest projections for home deliveries in the third quarter, while the largest, D.R. Horton, was forced to adjust its projections for the fourth quarter downward by about 2,000 homes, Construction Dive reports. But demand for houses has remained high enough for the two companies to raise prices and achieve year-over-year revenue gains well into the double digits.

Though the raw price of lumber has subsided from the dizzying highs of early summer, slightly more finished housing components are still much higher in price than last year and more difficult to obtain, Construction Dive reports. The price of wood windows is almost 300% higher than last year, while vinyl siding is 92% higher and paints are 62% higher.

As it pertains to construction, supply chain delays have been intermittent and unpredictable in both length and cause, Lennar co-President and CEO Jon Jaffe said on the company's Q3 earnings call. Both Lennar and D.R. Horton have been giving clients longer lead times to build in expected delays, but some projects have missed even those in the past quarter for Lennar, Jaffe said.

"In many ways, it's truly a game of whack-a-mole, creating a traffic jam," Jaffe said on the call. "The construction process is backed up, creating a chain reaction of delays that cascades from one [building] trade to the next. Like the rest of the industry, we not only saw our cycle time increase approximately two weeks in our third quarter, but we also had additional surprises that quickly changed delivery dates."

Sales of homes have also slowed, though Jaffe attributed that to the supply chain and labor issues as well rather than a change in customer demand. Lennar has also been trying to counteract its delays by increasing its construction starts and expects its supply chain to stabilize by the second quarter of next year, Jaffe said.

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