(Reuters) – Building a house linar (NYSE: NYSE) on Wednesday reported better-than-expected third-quarter earnings, benefiting from record-high real estate prices as demand outpaced supply crippled by a shortage of raw materials and labor.
While home builders have been enjoying steeper prices for a while, the US Federal Reserve’s decision to continue raising interest rates to curb inflation has made homes less expensive for buyers, and is starting to affect sales.
For the third quarter reported, Florida-based Lennar said new orders fell about 12% to 14,366 homes.
Stuart Miller, CEO of Lenar, said: “Sales are clearly affected by higher interest rates, but there is still a significant housing shortage nationwide, especially workforce housing, and demand remains strong as we navigate the rebalancing of price and interest rates. “.
Lennar, the second-largest homebuilder in the United States, said it expects to deliver between 20,000 and 21,000 homes in the fourth quarter at gross margins of 26% to 27%.
“Interest rates are moving and are likely to continue to move, and the housing market will continue to rebalance pricing and interest rates to meet demand,” Miller said.
“The long-term outlook for the housing market remains favourable,” smaller rival KB Home (NYSE:) said on Wednesday, after reporting a 26% increase in its quarterly revenue to $1.84 billion.
On an adjusted basis, Lennar earned $5.19 per share in the third quarter ended August 31, topping analysts’ average estimate of $4.88, according to Refinitiv IBES data.
It posted a 29% increase in quarterly revenue to $8.93 billion, but it was not expecting the average analyst forecast of about $9 billion.
Net income rose 4.3% to $1.47 billion.