(Updated with additional information, commentary and stock prices.)
saw its shares jump 6.9% in morning trading Monday after the homebuilder returned to year-over-year profitability, topping Wall Street's expectations.
Higher revenue and a greater number of home deliveries helped drive the builder's quarterly performance.
Lennar's report of a 15% drop in new-home orders was the most surprising statistic in the builder's report, according to Stifel Nicolaus analyst Michael Widner.
New-home orders fell by 15% to 2,624 homes after the expiration of the extended
, Lennar said.
Widner "anticipated a much larger orders decline on the other side of the tax credit," estimating a 25% drop in new-home orders, so Lennar's 15% reported decline was softer year-over-year but far better than expected.
Lennar said third-quarter earnings were $30 million, or 16 cents per share, a reversal from a year-earlier loss of $171.6 million, or 97 cents. Analysts expected a profit of $7.1 million, or 5 cents per share.
Revenue rose 14.5% to $825 million, easily beating expectations for sales of $777.5 million.
"During our third quarter, as expected, our sales pace declined as a result of the expiration of the Federal homebuyer tax credit at the end of April," said CEO Stuart Miller.
The average sales price of homes delivered increased to $240,000, from $239,000.
New home deliveries increased 9.4% to 2,909 homes in the quarter from 2,660 homes in the year-earlier quarter. At the same time, the average sales price of homes delivered increased to $240,000 from $239,000 a year earlier.
Sales incentives offered to homebuyers were $30,600 for each home delivered in the quarter, or 11.3% as a percentage of home sales revenue, compared with $42,200 for each home delivered in the same period last year, or 15% as a percentage of home sales revenue.
Lennar said it remains optimistic that its core businesses are on the right track to achieving "sustainable profitability" as the housing market recovers. The company also said that even though high unemployment and foreclosures have continued to present challenges for the national housing market, its communities have been less impacted than the broader market.
Widner sees the read-through as mixed for other builders in the sector, with "the greatest positive indication for
, which is heavily concentrated in the mid-Atlantic."
The analyst said implications are negative for
, due to report its quarterly financials Friday, because of its high concentration of business in California, a market particularly hard hit by unemployment and foreclosures.
the National Association of Home Builders reported that its index of builder sentiment came in flat month-over-month in September as still-high unemployment and high foreclosure rates continued to dissuade people from considering new-home purchases.
The NAHB said early Monday its confidence index, which measures builder perceptions of current single-family home sales and sales expectations for the next six months, held steady with a reading of 13 in September, disappointing industry watchers who expected the index to edge up to a reading of 14. Any reading below 50 points to poor sentiment.
"In general, builders haven't seen any reason for improved optimism in market conditions over the past month," said NAHB Chairman Bob Jones. "If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers feel more secure about the job market and economy."
Earlier this month, homebuilder builder
said it was
Beazer cited slower-than-anticipated improvements in new-home orders after the expiration of
. The company said prospective homebuyers continue to exercise caution in committing to a home purchase as general economic conditions still haven't showed enough improvement.
Beazer reported 3,438 orders for new homes through June 30, meaning the company expected fourth-quarter new-home orders of at least 767 homes, the company explained.
The housing market saw sales ramp up in March and April as consumers rushed to take advantage of tax credits that offered as much as $8,000 for first-time homebuyers and $6,500 for repeat buyers. Following the expiration of those credits on April 30, the market saw a dramatic decline in demand for the month of May that spilled over into June. Data for July showed a further drop in demand. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.
Stocks in the homebuilder sector were mostly higher Monday morning. The
SPDR S&P Homebuilders
, an exchange-traded fund that tracks the sector, gained 1.9% while the
iShares Dow Jones US Home Construction
ETF added 2.4%.
2.9%, Beazer 4.8% and
2.2%. NVR pushed up 2.1% and KB Home bid up 4%.
-- Written by Miriam Marcus Reimer in New York.
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