Lennar reports unexpected losses due to high mortgage rates

Lennar's shares declined on Thursday after the homebuilder reported weaker results and forecasts. This was due to increased mortgage rates that hindered sales. In the fourth quarter, the company reported earnings per share (EPS) of $4.06, with a revenue decrease of 9% compared to the previous year, amounting to $9.95 billion. Both figures were well below the estimates by Visible Alpha. Lennar attributed the revenue decline mainly to a 7% decrease in delivered housing units to 22,206 and a drop in the average sales price by 2.5% to $430,000. Additionally, new orders fell by 3% to 16,895 units, while the dollar value of new orders decreased by 1% to $7.18 billion. Co-CEO Stuart Miller stated that despite the Federal Reserve's interest rate cut, the housing market posed a greater challenge as mortgage rates rose by nearly 100 basis points during the quarter. He emphasized that although demand remained strong and the housing shortage drove the market, "affordability constraints" due to higher borrowing costs negatively impacted performance. For the current quarter, the company expects new orders in the range of 17,500 to 18,000, while analysts at Visible Alpha anticipated nearly 20,000. Deliveries are estimated to be between 17,000 and 17,500. Lennar's shares fell by 4.5% to $139.37, reaching the lowest level in a year.