June 25 (Bloomberg) -- Lennar Corp., the third-largest U.S. homebuilder, climbed 18 percent in New York trading after second quarter revenue exceeded analysts’ estimates and the company bolstered its cash.

Sales were $891.9 million, higher than the median estimate of $596 million in a Bloomberg survey of analysts. Lennar said home deliveries and new orders rose 47 percent and 67 percent, respectively, from the first quarter.

Lennar ended the quarter with $1.4 billion in homebuilding cash, up from $882.4 million a year earlier, and said today it had no outstanding borrowing under the company’s credit line. Chief Executive Officer Stuart Miller said the housing market “experienced an uptick in sales” in the quarter while not yet recovering from the slump.

“While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry,” Miller said in a statement. “This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner.”

The company is “starting to see signs that there is a corner out there to be turned,” Miller said in a conference call today.

Building Cash

Lennar climbed $1.37 to $9.19 in New York Stock Exchange Composite trading, for the biggest gain in the S&P 500. The stock is down 46 percent in the year through yesterday, making the company the second worst performer in an index of the 13 largest homebuilders.

“They continue to build cash on the balance sheet and there’s no near term liquidity issues,” said Robert Stevenson, an analyst at Fox-Pitt Kelton Cochran Caronia Waller in New York.

Stevenson rates the shares “underperform.”

Lennar’s net loss for the three months ended May 31 rose to $125.2 million from $120.9 million a year earlier, the Miami- based company said in a statement today. The loss of 76 cents a share was unchanged and exceeded the median of 67 cents forecast by analysts in a Bloomberg survey.

Lennar reported 38 cents a share in expenses to abandon options on home sites it doesn’t intend to purchase. Second- quarter deliveries dropped 18 percent to 3,149 from the year- earlier period, while orders slid 19 percent to 3,564, the company said.

Prices Fall

The average sales price fell 8 percent to $251,000 and the company offered incentives of about $52,600 per home, compared with $48,700 in the year-earlier quarter. The second-quarter backlog fell 48 percent from the year earlier period to 2,062 homes.

New U.S. home purchases unexpectedly fell in May as builder discounts failed to keep pace with the foreclosure-driven decline in existing house prices. Sales dropped 0.6 percent to an annual pace of 342,000, the Commerce Department said yesterday. Existing home sales climbed 2.4 percent, driven by a 17 percent drop in prices, the National Association of Realtors said June 23.

Builders including Lennar are competing with a glut of repossessed homes up for sale. Foreclosure filings, including default and auction notices as well as property seizures, climbed 18 percent in May from a year earlier, according to Irvine, California-based RealtyTrac Inc.

Foreclosures Rise

The number topped 300,000 for the third consecutive month, with an estimated one in every 398 homes in some stage of foreclosure.

Additional U.S. home foreclosures will probably total 6.4 million by mid-2011, and inventories of foreclosed homes awaiting sale will probably peak in mid-2010 at about 2 million properties, JPMorgan Chase & Co. analysts led by John Sim wrote in a June 5 report.

Lennar sold $400 million of bonds due 2017 in April, according to Bloomberg data. The 12.25 percent notes were priced to yield 969.6 basis points more than similar-maturity Treasuries, Bloomberg data show. The debt is rated B3 by Moody’s Investors Service, six levels below investment grade.

Chief Financial Officer Bruce Gross said in a conference call that the capital raised in the last quarter provides a “buffer” for the company during the slump while still leaving the homebuilder with money to grow.

“I’m not willing to say that we’ve got past this storm,” Gross said. “I don’t want to raise capital the last minute that I need it. I want to be ahead of the curve.”

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net.

Last Updated: June 25, 2009 16:29 EDT