Supply chain challenges remain so difficult in the housing industry that homebuilding giant KB Home (KBH) still cannot source enough garage doors, windows and cabinets.
“Garage doors, windows, cabinets, HVAC equipment and signage all remain constrained in the supply chain,” KB Home COO Robert McGibney said during a briefing. conference call Wednesday evening. “We expect material shortages to remain with us throughout this year and we will continue to aggressively address any new issues that arise.”
The shortages caused KB Home to miss analysts’ quarterly estimates for volume and shipments.
Shares fell 4% in Thursday trading.
KB Home’s supply chain issues partly reflect the continued effects of the pandemic plaguing industry suppliers and partly the strength of the U.S. real estate market.
A total of 6.12 million existing homes were sold in America in 2021, the most since 2006.
The pandemic has triggered a complete overhaul on people’s part when it comes to work-life balance. The house is now considered a real castle, with an office conference room. People fled cramped big cities, had pandemic babies and moved to bigger, more affordable homes in the suburbs.
And this crush in demand has put additional pressure on homebuilder supply chains.
Although sales of new and existing homes have slowed recently due to rising mortgage rates, experts generally believe that demand remains strong. The main problem, however, is that builders can’t build homes fast enough to meet demand, in part because of supply chain challenges.
Think of it as a snapshot of the mismatch between supply and demand: It would take just 6.3 months to exhaust the supply of new homes according to the latest data from the US Census Bureau.
To be sure, KB Home is not alone here.
“The following categories continue to face significant stress. These are Electrical Equipment, Garage Doors, HVAC Condensers, Flexible Ducts and Cabinets. In response to ongoing disruptions and the unknown future risk of new disruptions, our divisions are more closely managing local trades inventory and adding additional labor by onboarding new business partners, while our regional and country teams remain in constant communication with manufacturers and suppliers to support our divisions. Supply chain challenges in the first quarter resulted in increased cycle time and contributed to increased direct construction costs,” Lennar co-CEO Jon Jaffe explained during a call for results earlier this month.
Lennar Executive Chairman Stuart Miller added, “It’s not that the supply chain is solving quickly, it’s that we’re putting more houses in the ground.”
As Julie Hyman of Yahoo Finance reports, it might be time for homebuilders to use 3D printers to build homes. This could go a long way to ease pressures on the supply chain and attract more markets.