Miami-based homebuilder Lennar (LEN) reported a 40% rise in orders during the second quarter and trumped Wall Street expectations on sales and earnings, offering another sign the housing market is gradually recovering.
During the period, deliveries rose 20%, while new orders increased 40% to 4,481 homes, marking the fifth consecutive quarterly increase. Backlog increased 61% while operating margin nearly doubled to 9.2%.
"Evidence from the field suggests that the 'for sale' housing market has, in fact, bottomed and that we have commenced a slow and steady recovery process,” Lennar CEO Stuart Miller said in a statement. “The overall housing market has continued to improve.”
The company reported net earnings of $452.7 million, or $2.06 a share, compared with a year-earlier $13.8 million, or 7 cents. Excluding one-time items, it earned 21 cents, ahead of average analyst estimates of 17 cents in a Thomson Reuters poll.
Revenue for the three months ended May 31 was up 22% to $930.2 million, topping the Street’s view of $885.7 million. Revenues from home sales jumped 23% to $796.4 million, led by higher home deliveries and prices.
Miller cited highly conservative mortgage lending practices and challenging appraisals as constant headwinds, but said the company is experiencing net positive price and volume trends in most of its markets. While the housing downturn was national, the recovery process continues to be “very localized,” he said.
Lennar, which focuses on construction of single-family attached and detached homes, has been benefiting from the turnaround. In May, the Commerce Department said U.S. single-family home sales surged to a two-year high with the help of increasing prices.