Builder Horton Trims Forecast as Supply Chain Hampers Industry
(Bloomberg) -- The homebuilder D.R. Horton Inc. is struggling to navigate a tight labor market and supply chain disruptions that have made it more difficult to get building materials.
The company now expects as many as 21,700 home closings in its fiscal fourth quarter, down from 24,500, citing “significant disruptions in the supply chain, including shortages and delivery delays in certain building materials along with tightness in the labor market,” according to a statement Monday.
Horton shares dropped as much 3.4% to $87.75 in New York. The stock had gained 32% this year through Friday’s close.
PulteGroup Inc., another U.S. builder, also recently cut its guidance for closings because of supply chain issues. The company had previously said it was deliberately restricting orders as it struggled to acquire materials including lumber and windows.
“We expect supply side constraints to be a common theme across the group through the remainder of the year but remain confident that the demand backdrop is firm,” said Drew Reading, an analyst at Bloomberg Intelligence.
While the supply chain problems are making it difficult to build homes, the housing market remains hot. Strong demand is meeting limited inventory to continue pushing up prices.
Horton on Monday also boosted its gross profit margin forecast for the quarter as “strong new home demand and limited housing supply continue to support pricing power.”
Overall, the company said its guidance changes are expected to have “minimal impact” on its earnings.
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