Lennar profit beats as lower mortgage rates boost home sales

Lennar reported a higher-than-expected quarterly profit on Tuesday, as the No. 2 U.S. homebuilder’s sales got a boost from lower interest rates for mortgages, sending its shares up 4% before the opening bell.

Several years of rising rates had put a brake on parts of the U.S. housing market in 2018.

But a moderation in mortgage rates and house prices in 2019 has improved affordability, especially for first-time homebuyers who have been largely priced out of the market.

The 30-year fixed mortgage rate stood at an average of 4.14% in the week ended June 14, hovering at levels lowest since September 2017, according to data from Mortgage Bankers Association of America.

Orders at Lennar increased just 0.5% to 14,518 homes in the second quarter ended May 31, but were above the top end of the 14,000 to 14,300 range expected by the company.

Net earnings attributable to Lennar rose 36% to $421.5 million, or $1.30 per share in the second quarter ended May 31.

Total revenue rose 1.9% to $5.56 billion.

Analysts on average had expected earnings of $1.14 per share and revenue of $5.10 billion, according to IBES data from Refinitiv.

Watch: Are investors pricing out first-time home buyers?

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