Lennar’s Outlook Disappoints as Supply Crunch Crimps Builders

(Bloomberg) -- Lennar Corp. reported quarterly home deliveries that missed its own expectations as industrywide supply-chain breakdowns and labor shortages force U.S. builders to limit sales.

• For the three months through August, the Miami-based company delivered 15,199 homes, about 600 below the low end of its guidance, according to a statement Monday. For its current quarter, Lennar said it expects to close on about 18,000 homes, reflecting supply-chain constraints that will continue into the foreseeable future.

Key Insights

• Builders are increasingly running into roadblocks as delays in getting appliances, windows and construction materials slow production. D.R. Horton Inc. said Monday that it trimmed its forecast for closings for its fiscal fourth quarter, citing a tight labor market and supply-chain disruptions. The company followed PulteGroup Inc., which also lowered its expectations for closings.
• “Despite missing our delivery guidance, new-home demand remains strong, even as the market reverts back to traditional seasonality,” Executive Chairman Stuart Miller said in the statement. Orders rose 5% from a year earlier, and the company’s homebuilding gross margin of 27.3% was the highest quarterly percentage in its history, Miller said.
• While the housing market remains strong, in many areas, it’s not as hot as it was earlier in the pandemic. Builders including Lennar have pushed prices higher and faster than ever, but buyers in some markets have started to hesitate.

Market Reaction

• The shares fell as much as 4.4% in late trading Monday. They have climbed 29% this year, compared with a 24% gain for an S&P index of homebuilders.

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• Lennar will hold a conference call Tuesday at 11 a.m. New York time.
• An index of U.S. homebuilder sentiment rose for the first time in five months in September.

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