Lennar profit halves as higher mortgage rates pressure homebuyers
Sept 16 (Reuters) - Lennar LEN.N on Wednesday reported third-quarter profit that more than halved as persistently high mortgage rates weighed on demand for new homes.
The Miami, Florida-based homebuilder's shares fell 3% after the bell.
Third-quarter profit came in at $283.9 million, or $1.19 per share, compared with last year's nearly $591 million, or $2.29 apiece.
CEO Stuart Miller said the quarterly profits that came "below expectations" reflected the challenging economic environment, "which has deteriorated" since last quarter.
Like its peers, Lennar continues to grapple with a prolonged affordability crunch as mortgage rates neared 7% during the quarter and weakening consumer confidence prompted buyers to postpone home purchases, slowing demand across the new-home market.
During the quarter, U.S. homebuilder sentiment fell in June and July before unexpectedly ticking higher in August amid economic uncertainty and steep building costs aggravated by the U.S.-led war with Iran.
"Rates are responding as inflation remains above the Fed's target, driven by geopolitical tension and higher oil prices," Miller said.
This week, a Reuters poll of property experts showed that U.S. mortgage rates will stay higher than previously forecast and decline only modestly over coming quarters, keeping home price growth muted through next year.
Lennar expects the average sales price in the next quarter to range between $370,000 and $380,000 per unit, compared with analysts' estimate of $383,610, according to data compiled by LSEG.
For the quarter ended August 31, total revenue fell over 8% from a year ago to $8.05 billion.