Taylor Morrison Home CEO talks homebuilding
LOS ANGELES – Low mortgage rates and a severe shortage of previously occupied U.S. homes on the market have helped stoke demand for new homes this year, but supply chain problems and rising costs for building materials and labor have been a drag on the industry.
Big homebuilders like Scottsdale, Arizona-based Taylor Morrison Home Corp., have had to calibrate construction schedules to account for the supply crunch, which has caused delays and limited the number of homes for sale.
CEO Sheryl Palmer recently spoke to The Associated Press about the U.S. housing market and the impact of inflation and supply chain problems.
Question: It’s been a strong year for the new-home market. How do you see it heading from here?
Answer: There are a lot of dynamics at work, but when I just look at the supply-demand needs of providing shelter, the trajectory we’ve seen, with pricing moving the way it has, and the level (of construction) – I think everybody slowed it down to match production, to allow production to get caught up – I think we have a good runway ahead for the industry.
Q: How have the building materials constraints and higher prices for key components like lumber affected your business?
A: We found ourselves with $1,600-$1,700 lumber for a good part of this year, really unprecedented levels. We went ahead and continued to build customers’ houses. They cost a lot more than we thought they were going to cost when we sold them the house, because it was such an unprecedented movement in lumber.
Q: When you look at the surge in U.S. home prices this year, do you worry the pool of buyers who can afford a new home is shrinking?
A: There’s such an undersupply. When I look at affordability – I think the average was a 23% increase in (home) prices year-over-year – that’s unprecedented. Is that a sustainable formula? Absolutely not. Having said that, what’s also really interesting and has probably seeded some of that is if I were to look at a $400,000 house today and put a conventional loan on it – 20% down payment, 80% mortgage – my (monthly) payment would be lower today than it was a year ago, because interest rates have been so attractive.