The overall US housing market remained strong in the first quarter and
registered continued growth in new home demand and pricing, driven primarily by:
an extremely limited supply of new and existing home inventory, an increased
appeal for homeownership and single-family living, positive demographic trends,
along with low unemployment levels and resulting wage growth. These improvements
occurred despite a significant increase in mortgage interest rates during the
period. The rising cost of housing, inflation in the broader economy, and
increases in mortgage interest rates have placed additional pressure on overall
housing affordability. However, while affordability has become more challenged,
the cost of new housing continues to compete well with the cost of rental
housing. In the current environment, we continued to experience strong demand
for our products in the first quarter of 2022. While new orders were 19% lower
than the prior year period, the decrease was driven primarily by a 7% reduction
in community count in combination with Company actions to strategically manage
the pace of sales to better align with current production levels. As a result,
our order backlog increased 5% in units and 31% in dollars as of
Due to the increasing level of new homebuilding activity in the US, coupled with
impacts on the US supply chain and construction and municipal workforces due to
the COVID-19 pandemic, the availability of certain materials and construction
labor, combined with delays in municipal approvals and inspections, have
elongated the production cycle of the homes we are constructing. While we are
working with our supply partners, have significantly increased our speculative
housing starts, and have hired additional construction and customer service
employees, our production cycle times have extended in substantially all of our
markets. The time required to construct a home was approximately eight weeks
longer in the three months ended
The noted supply chain and labor issues are also leading to significant cost pressures in almost all areas of our business, but especially related to construction labor and materials. Specifically, the cost of lumber continues to be extremely volatile and remains elevated compared to historical norms. Additionally, the availability of certain wood products, including roof and floor trusses and oriented strand boards, remains challenged. We also continue to experience significant challenges with the cost and availability of windows, siding, and appliances, among other supply categories. To date, we have been, and believe we will continue to be, able to increase pricing to offset the majority of such cost increases due to expected ongoing high consumer demand.
Despite the development of vaccines and more effective treatments for the
physical impacts of COVID-19, there are no reliable estimates of how long the
COVID-19 pandemic, or its related impacts on overall economic conditions or the
global supply chain, will last. As a result, the unpredictability of the current
economic and public health conditions will continue to evolve. The
unpredictability of current economic conditions will also continue to evolve due
to disruptions occurring as a result of the military conflict in
22
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