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Lennar profit beats on strong home sales, higher prices

Lennar profit beats on strong home sales, higher prices

Lennar, the second largest U.S. homebuilder, reported a better-than-expected 50 percent jump in quarterly profit as it sold more homes at higher prices. Chief Executive Stuart Miller said he remained optimistic about the housing recovery given falling gasoline prices and the Federal Housing Administration’s decision to cut premiums.sonata-lennar

Lennar’s shares rose 1.6 percent to $46.49 in premarket trading on Thursday. The company said new orders, a key indicator of future revenue for homebuilders, rose 22 percent in the fourth quarter ended Nov. 30.

Applications for U.S. home mortgages surged by the most in more than six years last week as 30-year mortgage rates dropped below 4 percent for the first time since May 2013, the Mortgage Bankers Association said on Wednesday. However, Lennar joined smaller rival KB Home in forecasting a drop in margins in fiscal 2015, citing labor and land costs and increased sales incentives.

Lennar said its gross margin fell to 25.6 percent in the fourth quarter from 26.8 percent a year earlier. The company did not give a precise forecast for 2015. Net income attributable to Lennar rose to $245.3 million, or $1.07 per share, from $164.1 million, or 73 cents per share, a year earlier. Total revenue rose about 35 percent to $2.58 billion. Analysts on average had expected earnings of 96 cents per share on revenue $2.59 billion. Up to Wednesday’s close, the company’s stock had risen about 20 percent in the past 12 months, compared with a 12 percent rise in the Dow Jones Home Construction Index.

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