Lennar shares dip as current-quarter home delivery forecast misses estimates

Investing.com -- Shares in Lennar (NYSE:LEN) slipped in extended hours trading after the homebuilder unveiled guidance for third-quarter home deliveries that missed analysts' estimates. 

The current 30-year fixed mortgage rate currently hovers at around 7%, a two-decade high. Prospective homebuyers have subsequently shied away from purchasing real estate, leading some builders to slash prices and unveil fresh incentives in a bid to spur on demand.

Existing housing supply has also remained tight, in a sign that current homeowners, many of whom locked in low mortgage rates during an era of rock-bottom borrowing costs, are choosing to stay put rather than test the residential property market.

Meanwhile, the Federal Reserve has indicated that it now expects to cut interest rates -- a major influence on home loan costs -- only once this year, down from the central bank's prior projection of as many as three reductions.

Against this backdrop, Lennar predicted that third-quarter home deliveries would be between 20,500 to 21,000 homes, below analysts expectations of 20,917 units at the midpoint, according to LSEG data cited by Reuters.

Average sales prices are forecast at $420,000 to $425,000 in the current three-month period. In the second quarter, the figure came in at $426,000, down from $449,000 a year ago but above the firm's prior stated outlook.

For the three months ended May 31, Lennar posted fiscal second-quarter earnings of $3.45 a share, up from $3.01 a diluted share a year earlier, on revenue of $8.77 billion. Analysts were expecting earnings per share of $3.23 and revenues of $8.51 billion.

The beat on the top line was primarily driven by a 15% increase in home deliveries, although this was partially offset by a 5% decrease in the average sales price of homes delivered, Lennar said. New home deliveries increased to 19,690 homes in the second quarter from 17,074 homes in the same period a year earlier. 

Analysts at Oppenheimer added that Lennar's quarterly gross margin of 22.6% was in line with Wall Street estimates. However, they noted that the company's third-quarter forecast for gross margin of 23.0% was softer than expectations.

Yasin Ebrahim contributed to this report.