Home Builder Lennar Tops Expectations

Home builder Lennar logged another quarter of double-digit percentage gains in new orders, deliveries and net income, reflecting a sustained recovery in the U.S. new-home market. The company's earnings and revenue results easily topped analysts' expectations. The housing sector has continued to improve, the Federal Reserve said earlier this week when it raised interest rates for the first time in about nine years, sentiment that has been underscored by recent data. The Commerce Department this week reported a surge in ground-breaking by builders and climbing permits, which are proxy for future construction, though there are signs that an increasingly tight labor market in construction is starting to weigh on builders. On Friday, Chief Executive Stuart Miller said that improving employment levels, wage growth and consumer confidence "will keep the housing market on its slow and steady recovery." Mr. Miller said Lennar met its delivery schedule despite a tight labor market and the impact of new regulations. Miami-based Lennar, the second-largest U.S. home builder by houses constructed, said deliveries rose 10% for the fiscal fourth quarter from a year earlier. That rate slowed from 16% in the third quarter as a collapse in energy prices weighed on demand in Lennar's Houston market. Deliveries rose 10%, matching the third quarter's rate, while the average sale price rose 5.5%. Lennar said it saw higher land costs during the period, a factor that partially offset the effect of higher home prices and a decrease in the incentives Lennar offered buyers. Gross profit margin declined to 24.6% from 25.6% a year earlier, though it improved sequentially. Overall, Lennar reported a profit for the three months ended Nov. 30 of $281.6 million, or $1.21 a share, up from $245.3 million, or $1.07 a share, a year earlier. Revenue grew 14% to $2.95 billion. Analysts projected $1.12 in per-share profit on $2.30 billion in revenue, according to Thomson Reuters. Shares in the company, up 9.2% this year, were inactive premarket. Write to Lisa Beilfuss at lisa.beilfuss@wsj.com