Lennar sales miss estimates as housing demand slows
Reuters
Published Jan 09, 2019 11:24AM ET
Lennar sales miss estimates as housing demand slows
By Ankit Ajmera
(Reuters) - Lennar Corp (N:LEN) reported lower-than-expected quarterly home sales and orders on Wednesday, confirming fears that the U.S. housing market is slowing in the face of higher interest rates and rising prices after years of robust growth.
The company also put off giving a forecast for 2019 citing "continued softness and uncertainty" in the housing market.
Rising labor and raw material costs have led builders to increase home prices. This, combined with higher interest rates, led some homebuyers to defer their purchases.
Wall Street analysts expect demand for homes to be sluggish this year as job growth slows and mortgage rates continue to rise.
"We remain cautious on the homebuilding stocks given our outlook for a fairly tepid recovery in housing starts to continue in 2019, along with moderating builder fundamentals over the next two years," J.P.Morgan analyst Michael Rehaut said.
The Miami-based company joins a host of other builders that have warned of weakening demand. In November, larger homebuilder D.R.Horton (N:DHI) forecast weak home sales for the first quarter of fiscal 2019 and did not provide any details of its sales and profit expectations for the year.
"We continue to believe that the housing market is adjusting to a temporary disconnect between sales prices and buyer expectations," Lennar Executive Chairman Stuart Miller said.
Lennar, which bought smaller rival CalAtlantic last year, said sales surged 64 percent to 14,154 homes in the fourth quarter ended Nov. 30, but were below analysts' average expectation of 14,485 units, according to IBES data from Refinitiv.
Orders soared 44.2 percent to 10,611 homes, but missed estimate of 11,174 units.
Excluding items, Lennar earned $1.96 per share.
Total revenue rose 70.6 percent to $6.46 billion.
Analysts on average had expected revenue of $6.53 billion and earnings per share of $1.92.
Up to Tuesday's close, Lennar's shares had fallen 36.2 percent in the past 12 months, compared with a 27.6 percent decline in the PHLX Housing Index (HGX). They were marginally up before the opening bell in light trading.
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Written By: Reuters
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