Lennar
shares fell in after-hours trading after the home builder reported fourth-quarter and full-year earnings that beat estimates. Investors may have been disappointed by the company’s margin on home sales—or simply taking profits.
Lennar
shares closed at a new high on Thursday as mortgage rates slid.
One of the nation’s largest home builders, Lennar said it earned $4.82 a diluted share on revenue of $11 billion. Analysts had expected earnings of $4.59 a share on $10.2 billion in revenue in the quarter, according to
FactSet.
Thursday’s results bring the company’s full-year earnings to $13.73 a share on $34.2 billion also exceeded expectations, according to FactSet.
Mortgage rates, one of the main inputs of housing costs, fluctuated significantly during Lennar’s quarter ended Nov. 30.
Freddie Mac’s
weekly measure of mortgage rates climbed 0.67 percentage point from the first week in September to its highest point in late October—before retreating through most of November.
Mortgage rates have continued to fall since then: the average 30-year fixed mortgage rate this week was 6.95%, Freddie Mac said Thursday. Mortgage News Daily, which posts its survey result every day, pegged rates at 6.62% on Thursday.
“Higher interest rates tested home buyer sentiment, although purchasers remained responsive to incentives that enabled affordability,” Lennar co-CEO Stuart Miller said in a statement. “The well documented production deficit and chronic supply shortage continued to result in housing demand outweighing short supply.”
The company’s deliveries and new orders also beat expectations. Lennar said it received 17,366 new orders in the fourth quarter and delivered 23,795 homes, beating FactSet estimates that called for 16,816 new orders and 22,070 deliveries. New orders rose 32% from the year prior, while deliveries were up 19%.
Those sales came at a cost: The company reported a gross margin on home sales of 24.2%, lower than the 24.6% FactSet consensus had expected. The gain in sales was “driven by our operating strategy of maintaining production pace in lockstep with sales pace, using pricing and margin as a shock absorber,” Miller said. “Accordingly, our home-building gross margin in the fourth quarter was 24.2%, reflecting the pressure from higher interest rates.”
The company said it expects new orders in a range from 17,500 to 18,000 in the first quarter of 2024, and to deliver 16,500 to 17,000 homes.
Lennar stock closed up 6.6% on Thursday to $154.81, a new high, according to Dow Jones Market Data. Shares are up 21% this month to date, and have gained 71% so far this year.
Shares were down 2.9% in after-hours trading. The company will discuss its results on a conference call on Friday at 11 a.m. ET.
Write to Shaina Mishkin at [email protected]
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