Here’s the previous update after the July results:
JAN 172 result in
FEB 224 result in
MAR 365 result in
APR 365 result in
MAY 523 result in (452 was forecast so +71)
JUN 623 result in (457 was forecast so +166)
JUL 591 result in (462 was forecast so +129)
AUG 467 my forecast
SEP 473 my forecast
OCT 478 my forecast
NOV 483 my forecast
DEC 488 my forecast
TOTAL 5200 (original forecast was 4886 so +314)
In July, LGIH closed 596 homes instead of the 467 in my model.
JAN 172 result in
FEB 224 result in
MAR 365 result in
APR 365 result in
MAY 523 result in (452 was forecast so +71)
JUN 623 result in (457 was forecast so +166)
JUL 591 result in (462 was forecast so +129)
AUG 596 result in (467 was forecast so +123)
SEP 473 my forecast
OCT 478 my forecast
NOV 483 my forecast
DEC 488 my forecast
TOTAL 5323 (original forecast was 4886 so +437)
As I expected, LGIH management was forced to raise its guidance from 4700 to more than 5000 for FY2017. The divergence between the actual results and my model is increasing with each month. That’s not too surprising given that my model was somewhat conservative. It seems very likely now that, despite the effects of Harvey on the Houston market and of Irma on the Florida markets, LGIH will exceed their new guidance of 5000 homes. In fact, I would predict that the year end total home closings should easily exceed 5500 even if there is some impact on sales due to Irma. Interest rates, a key driver for home purchase affordability, remains very favorable; in fact, 10-year Treasuries are approaching 2%!! The other prediction is that management will be forced to raise their guidance again at the next earnings call. The one thing that could limit 2017 home closings is the availability of inventory; this was brought up on the earnings call.
Chris