Tags: Homebuilder | Lennar | Housing | Recovery

Homebuilder Lennar Sees Steady Housing Recovery as Orders Jump 40%

Wednesday, 27 June 2012 11:52 AM

U.S. homebuilder Lennar Corp. reported a rise in new orders for the fifth straight quarter and was able to demand higher prices in a housing market that it said was recovering slowly and steadily.

Lennar, the third-largest U.S. homebuilder behind D.R. Horton Inc. and PulteGroup Inc., also reported second-quarter earnings and revenue ahead of market estimates.

Miami-based Lennar said new orders jumped 40 percent to 4,481 homes. Orders are a key indicator for builders, which do not book revenue until they close on a house.

The company is seeing improvements in pricing and volumes in most markets despite lenders tightening their standards in disbursing mortgages, Chief Executive Stuart Miller said.

Margins rose 310 basis points to 22.5 percent for the quarter ended May 31. The average sale price of a Lennar home rose to $250,000 from $245,000 in the same quarter last year.

The company delivered 20 percent more homes, and backlog increased 61 percent. It sold more higher-margin houses and offered fewer incentives. Cancellation rate for the quarter fell marginally to 16 percent from 17 percent a year earlier.

Even though the recovery in the housing market has been erratic, there is mounting evidence of a turnaround.

New U.S. single-family home sales surged in May to a two-year high and prices rose from a year earlier, further signs the housing market recovery was gaining momentum.

Lennar, which was founded in 1954, focuses on construction of single-family attached and detached homes.

Net income for Lennar rose to $452.7 million, or $2.06 per share, for the quarter ended May 31 from $13.8 million, or 7 cents per share, a year earlier.

It earned 21 cents per share excluding valuation allowance of $403 million.

Revenue rose 22 percent to $930.2 million.

Analysts on average expected Lennar to earn 17 cents per share on revenue of $885.7 million, according to Thomson Reuters I/B/E/S.

Lennar shares, which closed at $27.39 on the New York Stock Exchange on Tuesday, were up 3 percent in trading before the bell. The stock has gained almost 40 percent this year.

© 2019 Thomson/Reuters. All rights reserved.

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Wednesday, 27 June 2012 11:52 AM
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