Lennar Q3 Earnings Miss Estimates Amid Rising Mortgage Rates
Lennar reported Q3 earnings per share of $1.19, falling short of the $1.29 analyst consensus. The company faces a monthly stock decline as 30-year mortgage rates approach 7%.
Lennar reported third-quarter earnings per share of $1.19, missing the analyst consensus of $1.29. Revenue stood at $8 billion, below the expected $8.4 billion. The stock has dropped more than 5% this month. GN auto markets/bonds: interest rates notes that the sector faces sustained pressure from macroeconomic factors.
New orders declined by 9% to 20,879 homes. Deliveries fell by 3% to 20,840 units. CEO Stuart Miller cited higher borrowing costs as a primary driver of softness in buyer activity. The company expects fourth-quarter orders to range between 19,500 and 20,500 homes.
Mortgage Rates Squeeze Buyer Affordability
The 30-year fixed mortgage rate rose to approximately 7% from 6.4% earlier in the year. The 10-year Treasury yield remains near 5%. Miller stated that nearly half of prospective buyers in key markets cannot qualify for loans. Higher monthly payments reduce the pool of eligible customers.
Fourth Quarter Guidance Falls Short
Lennar projects fourth-quarter earnings between $1.30 and $1.65 per share. This range is below the analyst estimate of $1.86. The company expects to deliver between 22,000 and 23,000 homes. Gross margins are forecast to sit between 15.5% and 16%.
The average home selling price is expected to range from $370,000 to $380,000. Existing home inventory continues to create competitive pressure. Miller indicated that the Federal Reserve is unlikely to offer near-term rate relief. Energy costs remain a factor in persistent inflation and household budget constraints.
