Lennar
stock was climbing after the company reported results that exceeded Wall Street’s expectations.
The home builder reported net earnings per diluted share of $3.01 on total revenue of about $8 billion, beating analyst estimates for $2.33 in earnings per share on revenue of $7.2 billion, according to FactSet. The company exceeded expectations for both orders and deliveries, with 17,885 new orders in the second quarter and 17,074 homes delivered. The second quarter, which ended May 31, covers the bulk of the typically hot spring season.
The company’s Class A shares (ticker: LEN) were up roughly 2% in after-hours trading Wednesday. Shares of other large builders may have benefited from the earnings as well, with
D.R. Horton
(DHI) up about 1.6%, and shares of
PulteGroup
(PHM) up 0.8%.
The company’s earnings beat bodes well for other builders that will report in coming months. Lennar also issued guidance for the third quarter that beat analyst expectations, calling for deliveries in a range from 17,750 to 18,250 homes.
The earnings capture the results of an unusual spring selling season. The housing market began to shift last spring and summer as mortgage rates rose, entering what some industry economists called recession last August. This spring, there were signs that buyers sought out newly constructed homes as the supply of existing homes remained relatively sparse.
Prospective buyers accepted a “new normal” of higher rates, executive chairman Stuart Miller said. “During the quarter, we continued to see the housing market normalize and recover from the Fed’s 2022 aggressive interest rate hikes in response to elevated inflation,” Miller said.
As buyers adjusted to a higher range for mortgage rates, “demand has accelerated, leaving the market to reconcile the chronic supply shortage derived from over a decade of production deficits,” Miller noted.
The company said its earnings are the result of adjusting pricing on its homes and offering incentives. While the company’s average sales price per home delivered declined to $449,000, its deliveries and new orders were both up compared with the year prior, Miller said. “Our homebuilding gross margin started to bounce back in the second quarter to 22.5%, reflecting cost reductions,” he added.
Lennar will discuss its results in more detail during a conference call at 11 a.m. on Thursday.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
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