Homebuilder Lennar posts sharp rise in first quarter orders

MIAMI, Fla., Tue Mar 27, 2012 – U.S. homebuilder Lennar Corp. reported its sharpest rise in orders in three quarters and said it was seeing strong signs of improvement in sales activity.

Miami-based Lennar’s new home orders have been increasing for four straight quarters as sentiment towards home purchases in the United States improves.

Low interest rates and home prices, and rising rental rates are prompting Americans to consider owning a home.

“We have seen a noticeable improvement in our sales pace per community” Lennar’s CEO Stuart Miller said in a statement.

“We have been able to increase sales prices and have started to reduce sales incentives in some of our communities,” he added and said the company would continue to be profitable in 2012.

New orders jumped 33 percent to 3,022 homes in the December-February period.

Homebuilder sentiment in March was the highest level since June 2007. And the S&P homebuilding sub-industry index .GSPHOME has doubled in value since October.

However, the recovery in the housing market is far from complete as a glut of unsold homes continue to pull down prices.

Last week, KB Home posted a surprise quarterly loss, hurt by smaller margins and more cancellations, and warned that the recovery would not be across the board.

Lennar, which also provides mortgage financing and invests in distressed real estate, said first-quarter profit was $15 million, or 8 cents a share, down from $27.4 million, or 14 cents a share, a year ago.

Analysts expected earnings of 4 cents a share, according to Thomson Reuters I/B/E/S.

Homebuilder Lennar posts bigger-than-expected quarterly profit

NEW YORK ― Homebuilder Lennar Corp. posted a larger-than-expected quarterly profit as it used more land bought at a discount, and said it expects a profitable 2011.

The third-largest U.S. builder reported earnings of $13.8 million, or 7 cents a share, compared with earnings of $39.7 million, or 21 cents per share, a year ago.

Wall Street analysts on average had expected earnings of 4 cents per share.

Sales of previously owned U.S. homes hit a six-month low in May and supply rose, the National Association of Realtors said on Tuesday, an indication of ongoing weak demand for even pre-owned homes, which are generally more affordable than the new ones built by Lennar and rivals such as PulteGroup Inc. and KB Home.

This environment took a toll even on Lennar, whose revenue fell 6 percent to $649.8 million, the company said in a statement. Lennar offered incentives of $33,900 per home to buyers ― or 12.1 percent of home sales revenue ― slightly more than last year at this time.

Miami-based Lennar, which builds homes in 14 states including Florida and California, was still able to make a profit in part because it used the housing slump to buy land more cheaply. The houses built on that land have higher margins.

Also, the company is one of the few among its rivals to start a distressed land operation, Rialto Investments, whose operating earnings were $9.8 million, up from $5.1 million last year.

Lennar’s shares were up 2.2 percent at $18.50 in thin premarket trading.