News: Lennar rides U.S. housing boom to exceed profit estimates.
(Reuters) – Lennar Corp beat quarterly earnings estimates on Tuesday as historically low mortgage rates and a shift to suburban living caused by the COVID-19 pandemic encouraged more Americans to buy homes.
The real estate market was one of the persistent bright spots during the coronavirus-triggered recession. However, there is a prospect of a slowdown as mortgage rates rise due to a surge in US Treasury bond yields.
Lennar put second-quarter orders – an indicator of future sales – between 16,500 and 16,700 homes, above analysts’ estimates of 16,240 homes, partly aided by the lack of previously owned homes in the market.
“A combination of still low interest rates, strong personal savings rates during the pandemic, strong government incentives and solid budget formation continue to drive demand,” said chairman Stuart Miller.
The Miami, Florida-based homebuilder ‘s shares were up 1% in expanded trading, after rising over 16% so far this year.
However, Lennar’s delivery forecast of 14,200 to 14,400 homes was below expectations of 15,067 homes as land restrictions and rising timber prices constrain construction activity.
The company’s earnings more than doubled to $ 1 billion in the first quarter, supported by a one-time profit of $ 469.7 million related to his investment in online real estate company Opendoor Technologies Inc, which went public in December.
That being said, earnings according to Refinitiv IBES were $ 2.04 per share, above analysts’ estimates of $ 1.71 per share.
Orders rose 25.8% to 15,570 homes while the number of homes sold rose 19.3% to 12,314. Revenue grew 18% to $ 5.33 billion.
Reporting from Lake Shreya Raj in Bengaluru; Adaptation by Aditya Soni
Original Source © Reuters