Lennar Corp beat quarterly profit estimates on Tuesday as historically low mortgage rates and a COVID-19 pandemic-induced shift to suburban living encouraged more Americans to buy homes.
The housing market has been one of the persistent bright spots throughout the coronavirus-driven recession. However, it faces prospects of a slowdown as mortgage rates rise on the back of a surge in U.S. Treasury yields.
Lennar estimated second-quarter orders — an indicator of future sales — between 16,500 homes and 16,700 homes, above analysts’ estimates of 16,240 homes, helped in part by a shortage of previously owned houses on the market.
“A combination of still low interest rates, strong personal savings rates during the pandemic, strong stimulus from the government, and solid household formation continue to drive demand,” Executive Chairman Stuart Miller said.
The Miami, Florida-based homebuilder’s shares were 1% higher in extended trading, having gained over 16% so far this year.
But Lennar’s delivery forecast of between 14,200 homes and 14,400 homes was below expectations of 15,067 homes, as land constraints and soaring lumber prices limit homebuilding activity.
The company’s profit jumped more than two-fold in the first quarter to $1 billion, buoyed by a one-time gain of $469.7 million related to its investment in online real estate firm Opendoor Technologies Inc, which went public in December.
Excluding that, profit was $2.04 per share, higher than analysts’ estimates of $1.71 per share, according to Refinitiv IBES data.
Orders surged 25.8% to 15,570 homes, while the number of homes sold jumped 19.3% to 12,314. Revenue rose 18% to $5.33 billion.