Signaling a broadening recovery of the U.S. housing market, Lennar (LEN) posted on Monday a stronger-than-expected third-quarter profit as housing prices and deliveries continued to improve from last year.
The Miami-based homebuilder, the third largest in the U.S., posted net earnings of $87.1 million, or 40 cents a share, compared with a year-earlier profit of $20.7 million, or 11 cents.
The results widely topped average analyst estimates of 28 cents in a Thomson Reuters poll.
Revenue for the three months ended Aug. 31 climbed 34% to $1.1 billion, Lennar's highest in nearly four years, beating the Street’s view of $1.05 billion. Deliveries of new homes increased 44% during the quarter to 4,198 at a cancellation rate of just 17%.
"The housing market has stabilized and the recovery is well underway,” Lennar CEO Stuart Miller said in a statement. He attributed the improvement to low mortgage rates, affordable home prices and increased buyer confidence.
While materials and labor costs continue to move higher, Miller said sales prices have improved and incentives have declined, helping to offset costs and translating to higher profitability.
The average sales price of homes grew to $258,000 in third quarter from $247,000 in the year-earlier period. Sales incentives offered to homebuyers fell to $26,100 from $33,600.
Shares of Lennar were up about 4% to $39 premarket on Monday.