Lennar Profit Jumps 32 Pct In Slowing US Housing Market


Lennar Corp, the No.3 U.S. homebuilder, reported a 13 percent jump in quarterly orders, defying a recent slowdown in the U.S. housing market that has hurt its bigger peers.

The company's shares rose 3 percent before the bell after it also reported a 32 percent jump in fourth-quarter profit, helped by the second-highest gross margins in its 59-year history.

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"They're best in class," Williams Financial Group analyst David Williams said. "These guys are doing everything that needs to be done and they're able to drive gross margins higher even in the face of rising costs."

Lennar is in a better position than most U.S. homebuilders to maintain its pace of building houses even in a slowing market because it bought land in high-demand areas through the downturn, allowing it to raise prices now that there is a shortage of developed lots.

D.R. Horton Inc, the No.1 homebuilder, has not been able to raise its prices as much due to its lower presence in areas close to the city centers, where demand is currently high.

Lennar said on Wednesday that its average selling price rose 18 percent to $307,000 in the fourth quarter ended Nov. 30.

In November, D.R. Horton reported an average sales price of $261,400 for its fiscal 2013 ended Sept. 30.

D.R. Horton and No.2 builder PulteGroup Inc also reported a drop in orders in their most recent quarters as mortgage rates increased and Washington was locked in a budget standoff.

Lennar's orders increased to 4,498 homes from 3,983 in the fourth quarter of 2012. Orders are a key indicator for builders, who do not book revenue until they close on a house.

Net income attributable to Lennar rose to $164.1 million, or 73 cents per share, from $124.3 million, or 56 cents per share, a year earlier.

Gross margins increased 330 basis points to 26.8 percent.

Total revenue jumped 42 percent to $1.92 billion.

Lennar shares were up 1.2 percent at $35.70 before the bell.