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Friday, January 21, 2022

Backlog of Demand, Home Orders ’22 . In favor of builders

by Alex Veiga , The Associated Press

US homebuilder stocks have outperformed the broader market this year, and analysts are bullish on prospects for further gains in 2022, despite expectations of a continuing supply chain crisis.

The SPDR S&P Homebuilders Exchange Traded Fund is up 45% this year. DR Horton and Lenar, two of the largest builders of homes sold, are up 52% ​​and 46%, respectively. The benchmark S&P 500 index is rising 23 per cent.

Strong gains reflect investor confidence in builders’ prospects to capitalize on a red-hot US housing market that is undermined by strong demand, still-low mortgage rates and a lack of homes on the market.

Meanwhile, supply chain constraints have prompted large builders to build up a backlog of home orders that they will not be able to deliver until next year.

“Early returns from winter so far suggest reasonable order strength, which bodes well for the 2022 spring sailing season,” BTIG homebuilding analyst Carl Reichardt wrote in a research note. He recently raised his 2022 earnings per share projections for most of those 12 homebuilders, including KB Homes and Lenar, which expect the builders to benefit from higher sales next year.

Homebuilders’ biggest problem in 2021 was being able to build homes fast enough to meet demand during one of the hottest housing markets in decades.

Disruptions in global supply chains, rising inflation and a shortage of skilled workers have led to construction delays and uncertainty, forcing many large builders to put brakes on the number of homes put up for sale. As a result, many builders have seen their backlog of home orders, which they have yet to swell.

Mobility has helped drive new US home sales in 2021. In October, new home sales hit a seasonally adjusted annual pace of 795,000, down 23% from a year earlier. In contrast, sales of previously occupied US homes were up 11% during the first 10 months of the year from where they were in 2020, on pace with sales of at least 6 million homes, the highest number in 15 years. Will be

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“If there were no supply chains and no labor shortages, we would be growing by double digits in terms of housing construction,” said Ali Wolf, chief economist at Zonda Economics, a real estate industry tracker. “Builders would sell more if they had more.”

Builders are still dealing with supply chain constraints and high prices for garage doors, windows, plumbing fixtures and other building materials.

During a recent conference call with analysts, builder Taylor Morrison Homes said it continues to see random construction product shortages nationwide and expects those to continue into the next year.

Lumber futures prices rose to an all-time high of $1,670.50 per thousand board feet in May, a two-fold increase from a year ago, fueled by strong demand for new construction and home remodeling and problems related to the pandemic limiting production. reflects. According to FactSet, it dropped to $456.20 in August, but has since risen and is now above $1,100.

Nevertheless, the housing market demand trends, especially the low inventory of homes for sale, bodes well for builders moving into the next year.

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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