Home builders have sold more homes than they can build. Now they are limiting their sales in an effort to catch up, helping push home prices even higher.
Low interest rates and the search for more space to work from home helped push sales of new homes to multiyear highs in late 2020 and early 2021. But builders have been hampered by labor shortages, steep lumber prices, material backlogs and a limited supply of ready-to-build land.
As a result, they couldn’t increase construction quickly enough to meet booming demand. Many are effectively turning away business.
“Through our history, to have somebody walk into our models and to tell them, ‘We don’t have a house for you to buy today,’ is something that is foreign to us,” said David Auld, chief executive officer of D.R. Horton Inc., on an earnings call last month.
D.R. Horton’s net sales orders fell 17% in the most recent quarter from a year earlier, as the company slowed its sales pace. “We’re all managing through a market that none of us have ever seen,” Mr. Auld said.
