Homebuilders were higher on Wednesday, defying the market sell-off, as positive earnings results from Lennar (LEN) caused a positive spillover into the other major homebuilder stocks.
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Lennar posted better-than-expected first-quarter earnings, with the company selling more homes at higher prices, while the company offered some bullish commentary on the future of the housing market.
There have been concerns that higher home costs, including higher interest rates affecting mortgage rates, Lennar’s CEO is optimistic about the future of the sector.
“We continue to remain positive on the outlook of the housing industry in general. Although interest rates have ticked up, unemployment remains low, the labor participation rate has been increasing, and wages have been moving modestly higher, though we think, even higher than the data the government captures,” said Chief Executive Officer Stuart Miller.
"Against a backdrop of higher demand, the production shortage over the past years has in fact resulted in supply shortages that are the underpinnings of at least stability and probably continued expansion of this housing recovery."
Shares of major U.S. homebuilders including Toll Brothers (TOL), PulteGroup (PHM), PHI (PHI) and KB Homes (KBH) were climbing.
Excluding costs related to acquisitions and taxes, Lennar earned $1.11 a share. Revenue rose 27.5% to $2.98 billion, above the $2.65 billion analysts were expecting, according to Thomson Reuters
Orders, a key indicator of future revenue, rose 30.4% to 8,456 homes in the quarter.