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(Rework of paragraph 1 with forecasts, update of actions)
Lennar Corp LEN.N forecast its third-quarter home deliveries would fall short of analysts’ estimates on Monday, a sign that demand for new homes is expected to remain weak as mortgage rates remain at their highest level in two decades.
Shares of the American home builder fell 1.9% in after-hours trading.
With a 30-year fixed mortgage rate near 7%, many buyers are priced out of the market, prompting builders to reduce base home prices and offer incentives such as mortgage rate buydowns or discounts. on property loan rates, in order to maintain the pace of sales.
“While affordability continues to be challenged by interest rate movements and consumer sentiment is simultaneously challenged, buyers have remained responsive to increased incentives to purchase. sale,” said Stuart Miller, executive chairman of the board.
Lennar reduced the average price per home to $426,000 in the quarter ended May 31, from $449,000 a year ago. Lennar delivered 19,690 homes during the period, compared to 17,885 units the year before.
The supply of existing homes also remains limited , as the majority of homeowners are unwilling to resell their homes, having locked in mortgage rates below 5% at a time when debt is cheap.
The company expects its third-quarter housing deliveries to be between 20,500 and 21,000, with the midpoint slightly below analysts’ estimate of 20,917 units, according to LSEG data.
However, second-quarter earnings of $3.45 per share beat analysts’ average estimate of $3.24 per share.
Its overall quarterly revenue was $8.77 billion, compared to an estimate of $8.52 billion.