In its third-quarter earnings report, homebuilder Dream Finders Homes (DFH 2.12%) reported the largest homebuilding backlog it has ever had, and by a big margin. In this Fool Live clip, recorded on Dec. 15, Dream Finders' CEO Patrick Zalupski explains to Fool.com contributor Matt Frankel how the company plans to get caught up in 2022.
Matt Frankel: I wanted to ask you about the current real estate market because it's really unlike anything I've ever seen. I'm sure you are in the same boat. I noticed that at the end of the third quarter, you had a backlog of -- I want to say it was about 6,300 homes, a little more than that -- and you closed on under 1,000 in the most recent quarter. So just doing the math, you have over a year and a half worth of backlog. I know a lot of that is probably supply chain issues, labor issues, perhaps. But how is Dream Finders going to catch up on that?
Patrick Zalupski: It's a great question. We've got answers. Supply chain is clearly having a significant impact on all homebuilders. I don't think our backlog at record levels is. Most homebuilders are at record levels right now. They are having challenges pushing the bottleneck through, and it'll breakthrough. I mean, it's just happened maybe not nearly to this extent in the past, but there has been growth challenges that we've had, and we've had to navigate through them. We don't bury our head in the sand ever when we have a problem. We figure out a way to work through it, and we really pride ourselves in being problem solvers. We do see supply chain relief. Albeit it's coming slowly, not as quickly as we'd like it to, but it is coming gradually. And we think through the end of '22, there will be challenges, but it's going to work itself out. Look, we've got to buckle down and deliver the units, and we're confident we'll do that. We've got a big task ahead of us, but that's no different than we've had for 13 years in a row growing at the rate we're growing.
Matt Frankel: It's certainly a good problem to have, it sounds like: having more demand that you really know what to do with at the moment. It's definitely an odd real estate market right now. I looked in Jacksonville [Florida], your home market, home prices are up 24% over the past year. In Charlotte, North Carolina, which is, I think, the market you are closest to me in -- and I'm in Columbia, South Carolina. It's even higher than that, the year-over-year gains. But you can't find houses. It's a really strange real estate market. Would you call this a good environment for homebuilders or a challenging environment?
Patrick Zalupski: That's a great question. Well, there's clearly challenges, obviously with the supply chain being the main one. But you just always have to have your finger on the pulse of what's happening. We feel like we're very quick to react. If we need to slow down sales or if the market feels a little too overheated, we can pull some levers there to protect the business. So we feel like we will recognize that and make corrections sooner than many of our peers will. Coming from the private world where you have to be more nimble and we think dynamic. And so it's a great question. I think the demand is strong.
Pricing, we definitely think, has stabilized. It's not going to go 24% year-over-year again, I don't think, in any of our markets, which we think is a good thing. We'd rather just have a nice, healthy, steady market is what our preference would be. But you still got to be prepared for any challenges, and we do see it stabilizing. We'll see how the spring selling season goes. But our view is that there is a healthy balance right now. Maybe it's a little bit supply-constrained, but it's not what it was maybe six months ago when it was really at a rampant pace, and that felt a little bit concerning from my perspective.
