Seattle’s wave of layoffs hampering housing market: DR Horton

[SEATTLE] Thousands of layoffs at Seattle-area tech companies have started to weigh on the housing market – and on some of the country’s biggest homebuilders. 

DR Horton chief executive officer Paul Romanowski pointed out “weakness out in the Northwest” on a call with analysts on Tuesday (Jul 21). “Especially as you look up into Seattle, where we’ve seen some of the shift in the software jobs and more layoffs and some headwinds to demand,” he noted.

Tech companies announced almost 124,000 job cuts this year through the beginning of June, up more than 65 per cent from the same period a year earlier. Seattle-based Amazon.com announced 2,100 layoffs to its local workforce in January, and Meta Platforms cut nearly 1,900 positions in the area this year, cutting costs as it dedicates more resources to artificial intelligence. 

DR Horton has said that it expects to sell fewer homes this year than previously forecast.  

Seattle’s median home price has fallen 2.3 per cent year over year, according to Redfin data from May, compared with a 2 per cent rise nationally. While the majority of DR Horton’s business focuses on first-time homebuyers and starter homes, the softness in the Pacific Northwest stands out in comparison to the company’s relative success in the Southeast.

And while the effects of AI are manifesting across industries, unemployment in the Seattle-area labour market hit a five-year high in January, though it’s fallen since. At the same time, Washington State lawmakers have added new taxes on the wealthiest households and largest companies, in an effort to address the wealth inequality created during the last tech boom.

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In general, the housing market continues to grapple with higher mortgage rates, inflationary pressures and an uncertain job market.

“We still see plenty of buyers out there in our sales offices as we travel and are in front of people,” Romanowski said on the call. “It’s just needing to see them be a little more confident in the overall economy and their ability to move forward with a sale and with a purchase today.”

The homebuilder is continuing to expand, entering 30 new markets in the past five years. BLOOMBERG