For the third-largest U.S. homebuilder by revenue, Lennar (NYSE:LEN), fiscal third-quarter profit more than quadrupled as demand for new homes grew.
According to the company’s quarterly report released Monday, net income for the period that ended August 31 soared to $87.1 million, or 40 cents a share, from $20.7 million, or 11 cents, last year. The Miami-based company’s results were better than predicted; Bloomberg analysts had estimated earnings of 28 cents per share.
For Lennar Chief Executive Officer Stuart Miller, the company’s third-quarter results showed that the housing market has stabilized.
“Low mortgage rates, affordable home prices, increased buyer confidence and an extremely favorable rent-to-own comparison are driving growth in each of our markets,” said Miller in a statement.
Due to low mortgage rates and a tight supply of properties, purchases of new homes have begun to recover. Builders began construction on 535,000 new single-family homes in August, and the National Association of Realtors announced last week that home sales reached an adjusted annual rate of 4.82 million, the highest level since 2010, when the federal home-buying tax credit aided sales.
Last quarter saw Lennar building more homes for higher prices: new orders for the builder increased 44 percent to 4,198 homes and the average sales price of homes delivered grew from $247,000 last year to $258,000.
“Lennar turned in a very solid quarter,” said International Strategy & Investment Group analyst Stephen East, in a note to clients on Monday. “There should be little doubt this builder is driving its homebuilding operations faster than most of its peers.”
Other builders have seen improved sales this quarter as well. Los Angeles-based KB Home (NYSE:KBH) reported unexpected profits for its fiscal third quarter on September 21. Shares increased by 16 percent as a result, the most since 2008. Stock prices also rose for D.R. Horton (NYSE:DHI) and PulteGroup (NYSE:PHM).
So far this year, through September 21, Lennar shares have risen 91 percent, while the he 11-member Standard & Poor’s 1500 Homebuilding Index increased 87 percent.
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