Lennar Leads Declines for Homebuilders After U.S. Starts Dropby
Construction fell 5.8% in August, led by a plunge in the South
Lennar says home deliveries fell in Houston, hurt by oil slump
Lennar Corp. led a decline in U.S. homebuilder shares after the company reported fiscal third-quarter results and the Commerce Department said nationwide construction of houses declined.
Lennar delivered 6,779 homes in the three months through August, up 7 percent from a year earlier, the Miami-based company said in a statement Tuesday. In Houston, hurt by the oil slump, deliveries declined, primarily because of a drop in demand at higher-priced communities. New orders rose 8 percent to 7,018 homes. Net income rose to $235.8 million, or $1.01 a share, compared with $223.3 million, or 96 cents, a year earlier.
The shares fell 2.2 percent to $44.12 at 10:45 a.m. New York time. It was the biggest decline in an S&P index of homebuilders, which was down 1.1 percent. U.S. home starts fell 5.8 percent in August, led by a plunge in the South, the nation’s biggest region for homebuilding, Commerce Department data showed.
While Lennar had a solid quarter with no negative surprises, the market responded to the home-starts data, after being up the previous day on a report that showed homebuilder confidence rose to an 11-month high in September, according to Megan McGrath, an analyst at MKM Holdings LLC in Stamford, Connecticut.
“These big swings on a daily basis could be pointing to a lack of conviction in the housing space from investors, as the macro data continues to be inconsistent,” McGrath said in an e-mail.
Lennar, the second-biggest U.S. homebuilder and one of the industry’s most successful firms, loaded up on land during the crash, when prices were cheap, and is now benefiting as low borrowing costs and job growth bolster buyer demand. Lennar said it plans to increase efforts to reach entry-level buyers, a strategy that has succeeded for companies such as D.R. Horton Inc., the No. 1 homebuilder.
“We have continued to focus our land spend on high quality, ‘A’ locations while also ramping up our first-time homebuyer land positions as that segment of the market continues to improve,” Chief Executive Officer Stuart Miller said in the statement.