Lennar Profit Tops Estimates as Home Prices Increase

Lennar Corp. (LEN), the biggest U.S. homebuilder by market value, reported a fiscal first-quarter profit that beat analysts’ estimates as the company sold more homes at increased prices.

Net income climbed to $78.1 million, or 35 cents a share, in the three months through February, from $57.5 million, or 26 cents, a year earlier, the Miami-based company said in a statement today. Analysts expected earnings of 28 cents a share, the average of 17 estimates compiled by Bloomberg.

Publicly traded builders have been increasing prices to take advantage of a tight supply of new and existing homes while using their economies of scale to reduce costs and widen profit margins. Lennar’s profit, deliveries and orders grew even as inclement weather threatened home sales in much of the U.S. during the quarter, according to Drew Reading, a Bloomberg Industries analyst.

“Lennar followed KB Home (KBH) in reporting order trends indicating a strong start to the spring selling season,” Reading said in a note after the earnings were released.

KB Home, a Los Angeles-based builder, reported fiscal first-quarter earnings that beat estimates yesterday as it raised prices and opened communities in high-cost, land-constrained markets, such as parts of California.

Orders, Prices

Lennar’s orders by volume climbed 10 percent to 4,465 homes and increased 26 percent by value to $1.5 billion. Revenue rose to $1.36 billion from $990 million, while the number of houses delivered increased to 3,609 from 3,186 last year. The average sale price increased to $316,000 from $269,000.

“We’ve led this recovery with price-increase recovery as opposed to volume recovery,” Chief Executive Officer Stuart Miller said on a conference call with analysts. “But as we go forward, we suspect that we’re going to see volumes increased.”

Lennar builds homes for first-time and move-up buyers, retirees and multiple-generation households in 18 states. It also invests in apartments, master-planned communities, mortgage financing and distressed real estate assets.

U.S. builders received permits to build new residences at an annual pace of 1.02 million in February, up 6.9 percent from a year earlier, the Commerce Department reported this week.

Lennar fell 2.5 percent to $40.32 after gaining as much as 2.8 percent earlier in the day. The shares have increased 1.9 percent this year, compared with a 1.3 percent decline for the Standard & Poor’s Supercomposite Homebuilding Index.

To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net Christine Maurus

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