Homebuilder Lennar’s (LEN) strong third-quarter earnings come amid positive industry reports on builder confidence.
Lennar recorded third-quarter 2014 net earnings of $177.8 million, or $0.78 per share, compared to third-quarter 2013 net earnings of $120.7 million, or $0.54 per diluted share.
Earnings per share beat expectations by $0.11, while revenue beat by $50 million.
“Our core homebuilding business continues to drive earnings, with strong sales, deliveries and margins. New orders in the quarter rose 23% over the prior year, with increases in each of our segments. Our gross and operating margins edged higher year over year to 25.2% and 14.8%, respectively. Our sales backlog increased 29% from last year to approximately $2.5 billion, providing an excellent foundation going forward,” Stuart Miller, CEO of Lennar Corporation, said.
Meanwhile, on Wednesday the National Association of Home Builders/Wells Fargo Housing Market Index, hit 59 — the highest level since November 2005. This is the fourth consecutive month it has increased, reaching a nine-year high.
“Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.
During the Bipartisan Policy Center’s 2014 Housing Summit, Beth Ann Bovino, chief economist of Standard & Poor’s, said certain negative economic conditions are now turning around, as proof that housing can be sustained.
"Real wages were negative, we’re starting to see that turn around. We’re wondering where the consumers were and it seems they’ve gone back to the mall. We’ll be looking to see housing starts finally reaching and holding 1.5 million in two years," Bovino added.
The most recent housing start numbers from the U.S. Census Bureau and the Department of Housing and Urban Development showed housing starts and housing permits recovering in July, printing at 1,093,000 and 1,052,000, respectively. The next release date will be Thursday.
“The recovery has traveled in a fairly narrow channel driven by a need for production and limited by credit availability. Within that channel the road has been somewhat volatile, atypical of previous recoveries, and often difficult for many to read. Our core homebuilding business is hitting on all cylinders as we have properly considered and understood the uniqueness of this recovery," Miller said.
At midday Monday, Lennar’s stock was up 4.58%, while the HW 30, HousingWire’s exclusive list of mortgage-related stocks was up .23%.