This mega homebuilder is still having trouble finding garage doors, kitchen cabinets and windows

2022-09-16 20:14:35 By : Ms. Jo Ren

The supply chain challenges remain so tough in the housing industry that homebuilding giant KB Home (KBH) still can't source enough garage doors, windows and cabinets.

"Garage doors, windows, cabinets, HVAC equipment, and signing, all remain constrained within the supply chain," said KB Home COO Robert McGibney on a Wednesday evening earnings call. "We expect shortages of materials will stay with us throughout this year and we will continue to aggressively address any new issues that arise."

The shortages caused KB Home to miss quarterly analyst estimates for volume and deliveries.

Shares fell 4% in Thursday trading.

KB Home's supply chain issues reflect one part ongoing effects of the pandemic that is plaguing the industry's suppliers, and one part strength in the U.S. housing 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 rethink on the part of people as it pertains to work-life balance. One's home is now truly considered their castle, with an office conference room. People fled cramped major cities, had pandemic babies and opted for larger, more affordable homes out in suburbia.

And that crush of demand has placed extra pressure on homebuilder supply chains.

While new and existing home sales have softened recently due to rising mortgage rates, experts generally believe demand remains solid. The main issue, however, is that builders can't build homes quick enough to satisfy demand in part because of the supply chain challenges.

Consider this as a snapshot into the supply/demand mismatch: it would only take 6.3 months to exhaust the supply of new homes according to the latest data from the U.S. Census Bureau.

To be sure, KB Home isn't alone here.

"The following categories are continuing to deal with significant constraints. These are electrical equipment, garage doors, HVAC condensers, flex duct, and cabinets. In response to the ongoing disruptions and future unknown risk of new disruptions, our divisions are more closely managing the inventory of local trades and adding additional labor by onboarding new trade partners, while our regional and national teams stay in constant communication with manufacturers and suppliers in support of our divisions. The supply chain challenges in the first quarter resulted in an increase in cycle time and contributed to an increase in direct construction costs," explains Lennar co-CEO Jon Jaffe on an earnings call earlier this month.

Added Lennar executive chairman Stuart Miller, "It's not that the supply chain is quickly getting resolved, it's that we are putting more homes in the ground."

As Yahoo Finance's Julie Hyman reports, perhaps it's time for homebuilders to use 3D printers to build homes. It could go a long way to alleviating supply chain pressures and getting more home to markets.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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