Lennar Corporation (NYSE: LEN) and KB Home (NYSE: KBH) both flagged rising cost pressures during their latest earnings calls, pointing to data-center-driven labor shortages, tariffs, and inflation as headwinds for the housing market.
Lennar’s Labor Squeeze
During Lennar’s third-quarter earnings call in September, Stuart Miller, Lennar’s chairman, president, and CEO, said labor availability “is definitely one of geography.” “It is data centers. It is also, you know, immigration crackdowns that are happening sporadically in different locations,” Miller said, adding that “tariffs are having their impact” as well.
David Collins, Lennar’s executive vice president for homebuilding, said the pressure is concentrated in certain markets. “I’d say roughly 20% of our divisions right now are seeing greater pressure than the vast majority,” he said, crediting strong trade-partner relationships for cushioning the impact. Miller added that the shortage shows up unevenly by trade: “Particularly in certain trades, landscaping being an example… all of a sudden we’ve got trade partners that have no crews.”
Executives also pointed to a resurgent resale market as a competitive pressure. “The resale market is becoming more and more of a competition,” Miller said, though Jim Parker, Lennar’s chief operating officer, said increased resale activity can also unlock more move-up buyers.
Oil-Driven Inflation
The labor and inflation pressures aren’t new for Lennar. Back in June, during its second-quarter earnings call, Miller had already flagged energy costs as a driver of broader inflation, saying gasoline prices were “up over 40% year-over-year, driven by disruptions to oil supply tied to the Iran conflict,” and that headline inflation had hit 4.2% year-over-year at the time.
KB Home’s Inflation And Fuel Pressures
KB Home President and CEO Rob McGibney said his company has built fuel surcharges directly into trade contracts to offset rising costs. “We’ve also set those up as direct fuel surcharges, so when and if fuel prices pull back, we can immediately extract those out,” McGibney said on KB Home’s September third-quarter call. He added that the company “experienced some increasing cost pressure from fuel, general inflation, and tariffs” as the quarter progressed, and expects “slightly higher sequential direct costs” for fourth-quarter deliveries.
On labor, McGibney said KB Home has fared better than peers. “We really haven’t had a lot of issues getting labor to our job sites,” he said, calling reported industry challenges mostly “anecdotal.”
Earnings Snapshot
Lennar’s third-quarter revenue of $8.05 billion missed analyst estimates, with new orders down 9% year-over-year, as Miller said the operating environment “has deteriorated since our last earnings call.”
KB Home, by contrast, posted a third-quarter revenue and earnings beat, with $1.297 billion in revenue and $1.05 per share, even as Executive Chairman Jeff Mezger said conditions have been “weakening since our June earnings report.”
The pressures come against a broader affordability debate, as rising home prices continue to interact with wages, mortgage rates, and available credit — with some buyers already questioning how long continued price appreciation can be sustained before demand simply stops showing up.
Lennar’s shares were down 0.72% to $81.00 during premarket trading on Thursday, while KB Home stock declined about 2.09% to $45.50.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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