America’s largest homebuilder in terms of market capitalization, Lennar Corp. (NYSE: LEN) reported better-than-expected fiscal fourth-quarter results on Tuesday as revenue soared 42 percent during period, thanks to record low mortgage rates and contracting supply of existing homes which prompted Americans to own a new house.
The Miami-based homebuilder also reported a seventh consecutive quarterly jump in new home orders.
Addressing analysts and investors in a conference call, Lennar’s Chief Executive, Stuart Miller, said in a statement, “Low mortgage rates, affordable home prices, reduced foreclosures and an extremely favorable ‘rent vs. own’ comparison continue to drive the recovery.”
The U.S. housing market, which virtually collapsed after the credit and housing bubble burst and subsequent financial crisis from 2008, is witnessing a gradual recovery in the recent past due to combination several factors such as record low interest rates, climbing rents, and falling bad loans which in turn emboldened mortgage lenders to lend aggressively.
Homebuilders are now initiating new projects as both home sales and prices are rising. According to Thomson Reuters, prices of ‘single-family’ homes rose for nine successive months in October.
A poll conducted by Bloomberg among 49 economists shows that The National Association of Home Builders/Wells Fargo index of confidence, which is scheduled to be released tomorrow, is likely to rise for ninth successive month in January to 48, a highest reading since April 2006—a period when U.S. housing market was overheating.
“Our fourth quarter reflects the recovery in housing with solid profitability in all of our business segments…. As we head into 2013, we are extremely well positioned to gain market share in a recovering market,” added, Miller.
For the fiscal fourth quarter, net income stood at $124.3 million or 56 cents a share, compared to a profit of $30.3 million or 16 cents a share, in the year earlier quarter.
Revenue for the quarter climbed 42% to $1.35 billion from $953 million, in the year earlier quarter.
Analysts polled by Thomson Reuters, forecasted earnings of 44 cents a share on revenue of $1.31 billion.
While new orders jumped 32% to 3,983 homes, the average selling price of new homes delivered climbed to $262,000 from $243,000, the homebuilder said.
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