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Lennar's 2020 home sales to go above estimates as lower prices boost demand
LENNAR Corporation on Wednesday forecast 2020 home sales in the US above analysts' estimates, encouraged by strong demand on the back of lower home prices and mortgage rates. Its shares rose 3 per cent.
The country's No. 2 homebuilder said it expects to deliver between 54,000 and 55,000 homes in 2020. Analysts on average were expecting 53,954 unit sales, going by Institutional Brokers Estimate System (IBES) data from Refinitiv.
Lennar also forecast full-year gross margins to be in the range of 20.5 to 21.0 per cent, above analysts' estimates of 20.30 per cent; it added that it was reducing its construction spend and that labour and raw material costs remained relatively flat.
The US housing market has been steadily rising, driven by the Federal Reserve's three interest rate cuts last year, pushing down mortgage rates from multi-year highs in 2018.
"During the fourth quarter, the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remained favourable," Lennar chief executive Rick Beckwitt said in a statement.
The company topped estimates for fourth-quarter profit and revenue, selling 16,420 homes in the quarter, up from 14,154 homes a year ago. The average price fell 6.7 per cent to US$393,000.
Orders, which indicate future demand, rose 23.4 per cent to 13,089 homes in the quarter.
Sales of new US single-family homes rose in November; in December, confidence among homebuilders hit levels last seen in June 1999.
Net income attributable to the company fell to US$674.3 million, or US$2.13 per share, in the quarter ended Nov 30, from US$796.1 million, or US$2.42 per share, a year earlier.
Revenue rose 8 per cent to US$6.97 billion.
Analysts on average had expected earnings of US$1.90 per share on revenue of US$6.55 billion. REUTERS