America's 2nd-largest homebuilder outlines why the housing crisis is good news
Lennar Corporation, America's second-largest homebuilder by construction, reported first-quarter earnings Tuesday morning that were better than analysts expected.Its profits increased 25% from a year earlier to $144 million, or $0.63 a share. Revenues rose 21% to $2 billion.
Its homebuilding revenues jumped in the quarter along with the average sale price of homes.As we've outlined before, home prices are rising in part because not enough homes are being built.
For the homebuyer, tight inventories mean rising prices and higher chances of not being able to afford a home, even with low mortgage rates.But for the seller, higher prices can be a boost to the bottom line. And that's partly what has delivered a strong quarter for Lennar.In the earnings release, CEO Stuart Miller said (emphasis ours): "Despite global economic concerns and volatility in the stock market, our net earnings increased 25% year-over-year, and we had solid performances in most of our businesses. We continue to believe that the housing market is continuing its slow and steady recovery driven by years of under production, tight inventory levels, attractive interest rates, and the lowest unemployment levels since 2008."
The company reported that its average sales price of homes rose 12% to a record $365,000 in the first quarter. It operates in 19 states, including California, New York, and Florida.
Lennar's shares rose as much as 3% in premarket trading. Over the past year, they've fallen 7%.
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