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Lennar falls short on home deliveries, blames supply chain

Homebuilding giant completed over 15K homes Q3, hundreds below its lowered estimate

Lennar falls short on home deliveries, blames supply chain
Stuart Miller and a Lennar single family home (Lennar)

For homebuilding giant Lennar, there was plenty of demand for properties in the third quarter. And while supply remained low, the real problem was the supply chain.

The Miami-based homebuilder delivered 15,199 homes in the third quarter, about 600 below the low end of its guidance, it announced Tuesday at a third quarter earnings call.

Those supply chain delays — which are affecting wide swaths of the economy — Lennar said it will also lower guidance for deliveries in the fourth quarter.

“During the third quarter, our company and the homebuilding industry as a whole continued to experience unprecedented supply chain challenges which we believe will continue into the foreseeable future,” Lennar executive chairman Stuart Miller said in a statement.

Co-CEO Jon Jaffe said that engineered wood, windows, garage doors, paint and vinyl siding were experiencing the most supply chain delays.

The company expects those issues to stabilize in the second quarter of 2022. Lennar, among the largest homebuilders in the country, is known for its low-cost, no-frills homes.

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Lennar’s earnings highlight the main challenge homebuilders have experienced this year.

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Despite high demand for new homes, homebuilders have struggled to secure supplies for construction. Another large homebuilder, D.R. Horton, also lowered its expectations for home closings in the fourth quarter, citing supply chain and labor issues.

For Lennar, supply challenges have also slowed its construction of housing communities. Home community count remained flat in Q3 from a year before. The company plans to lower Q4 guidance for new construction, from 10 percent growth to 7 percent.

Outside of the supply issue, Miller said the housing market remains strong as the inventory of new homes remains constrained for the near future.

“The story remains that supply is short and demand is strong,” Miller said in the call with analysts.

Lennar’s revenues from home sales increased 19 percent in the third quarter to $6.5 billion compared to $5.5 billion last year. New orders of homes also rose, 5 percent, to 16,277 during the same time period.

The company reported third quarter revenue of $6.9 billion and net income of $1.4 billion.

Profit margins on home sales also improved, rising to 27.3 percent in the third quarter from 23.1 percent in the third quarter of 2020.

Lennar’s Co-CEO Rick Beckwitt said Texas has the strongest housing market in the country, citing its “pro-business employer-friendly economy,” which is resulting in corporate relocations.

As of Tuesday afternoon, Lennar’s stock had fallen over 3 percent since it released its earnings on Monday.

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