D.R. Horton said orders fell by 16.5%
D.R. Horton, the largest US homebuilder, reported strong earnings today but shares are down 5% after it said sales orders fell by 16.5% in the quarter.
Volatility in lumber prices, labor shortages and buyer skittishness are likely behind the dip.
I tend to think the market is overreacting. The company can sell every home that it builds at great — near record — margins. I think they’re simply waiting until later in the building cycle to sell.
If you have an asset that’s appreciating, you hold onto it a bit longer. Especially when the cost of capital is as low as it’s ever been. That’s classic inflationary behavior.
I wonder if similar sentiment plays out in the rest of the economy as bottlenecks build. The signals from real-time data might skew just how strong underlying demand is.