Investing.com – Stocks Lennar (NYSE:) fell in extended trading after the homebuilder provided guidance for third-quarter home deliveries that missed analysts’ estimates.
The current 30-year fixed mortgage rate is currently hovering around 7%, a two-decade high. Potential home buyers have subsequently shied away from purchasing properties, prompting some developers to cut prices and introduce new incentives in an attempt to stimulate demand.
Existing housing supply also remains limited, a sign that current homeowners, many of whom are stuck with low mortgage rates in an era of rock-bottom borrowing costs, are choosing to stay put rather than test the residential real estate market.
Meanwhile, the Federal Reserve said it now expects to cut interest rates (which would have a major impact on mortgage costs) just once this year, down from the central bank’s previous forecast of as many as three cuts.
Against this backdrop, Lennar predicted third-quarter home deliveries of 20,500 to 21,000 homes, below analysts’ expectations of 20,917 units at midyear, according to LSEG data cited by Reuters.
Average selling prices are forecast to be between $420,000 and $425,000 for the current three-month period. In the second quarter, the figure was $426,000, up from $449,000 a year ago, but higher than the company’s previously stated forecast.
For the three months ended May 31, Lennar posted fiscal second-quarter earnings of $3.45 per share, down from $3.01 per share a year earlier on revenue of $8.77 billion. Analysts had expected earnings per share of $3.23 , and revenue – $8.51 billion.
The revenue growth was primarily driven by a 15% increase in home deliveries, although this was partially offset by a 5% decline in the average sales price of completed homes, Lennar said. Deliveries of new homes increased to 19,690 homes in the second quarter from 17,074 homes in the same period a year earlier.
Lennar’s quarterly gross margin of 22.6% was in line with Wall Street estimates, Oppenheimer analysts added. However, they noted that the company’s third-quarter gross margin guidance of 23.0% was softer than expected.
Yasin Ebrahim contributed to this report.