Homebuilder Lennar beats profit estimates on strong property prices

March 14 (Reuters) – Homebuilder Lennar Corp (LEN.N) on Tuesday reported a better-than-expected quarterly revenue as excessive property costs helped offset provide shortages brought on by rising materials prices and a labor crunch.

Shares of the corporate rose 3.5% to $104.3 after the bell.

House demand shot up throughout the USA when pandemic-era distant work tendencies allowed individuals to search for extra inexpensive properties away from large cities, boosting the margins of homebuilders comparable to Lennar and D.R. Horton Inc (DHI.N).

Nevertheless, the business is now looking at a slowdown as excessive rates of interest have made borrowing harder for potential patrons.

Final month, knowledge confirmed that the typical rate of interest on the preferred U.S. dwelling mortgage rose to its highest since November on issues that the Federal Reserve may need to proceed tightening coverage by the summer season to subdue inflation.

“Our gross sales quantity and pricing have clearly been impacted by rising rates of interest, however there stays a big nationwide scarcity of housing, particularly workforce housing, and there may be nonetheless demand,” Lennar Government Chairman Stuart Miller mentioned in an announcement.

The corporate’s new orders fell 10% to 14,194 properties within the first quarter.

Lennar reported web earnings per diluted share, excluding gadgets, of $2.12 per share, above analysts’ common estimate of $1.55 per share, in line with Refinitiv knowledge.

Revenues rose 5% to $6.49 billion, in contrast with estimates of $5.93 billion.

Reporting by Priyamvada C and Kannaki Deka in Bengaluru; Modifying by Devika Syamnath

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