((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Added details to paragraphs 6 and 8, and analyst commentary to paragraph 11)
Lennar Corp LEN.N on Wednesday reported first-quarter profits that beat Wall Street estimates as historically low existing housing supply led to sustained demand for new unit construction.
The company delivered 16,798 homes in the quarter ended February 29, a 23% jump from the previous year.
“The macroeconomic environment remained relatively stable throughout the quarter,” said Stuart Miller, co-chief executive of Lennar, adding that housing supply remained chronically undersupplied due to production shortfalls experienced over the past decade.
The 7% interest rate on 30-year mortgages, combined with low availability of existing homes, has created a tight supply and driven up house prices, but caused many potential buyers to leave the walk.
To counter this, Lennar reduced the average base home price to $413,000 during the quarter, compared to a sales price of $448,000 per home a year earlier.
Gross margins on home sales increased slightly from a year earlier, to 21.8%, a sign that sustained demand and the length of construction cycles are returning to pre-pandemic levels.
Lennar also expects second-quarter home deliveries to be between 19,000 and 19,500, which is higher than analyst estimates (18,889), according to LSEG data.
The company also expects 20,900 to 21,300 new orders for the current quarter, a forecast that Barclays analysts say could be seen as in line with or slightly below investors’ more optimistic expectations.
The second-largest homebuilder in the United States reported earnings of $2.57 per share for the quarter, beating analysts’ average estimate of $2.20 per share and topping analysts’ $2.06 per share. last year.
However, the revenue of $7.33 billion fell short of analysts’ estimates of $7.38 billion.
“We expect a muted to slightly negative reaction from stocks tomorrow after printing largely in line,” Matthew Bouley, an analyst at Barclays, wrote in a note.
Shares of Lennar, headquartered in Miami, Florida, were down 1% in after-hours trading.