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One of the nation’s largest homebuilders reported increased losses during the third quarter but also issued a forecast on the housing market that was so rosy it moved stocks higher during pre-market futures trading this morning.
“Consumer sentiment has significantly improved as homebuyers have recognized that the residential housing market is stabilizing,” said Stuart Miller, president and CEO of Miami-based Lennar. The company’s third quarter net loss in 2009 was $171.6 million, or $0.97 per diluted share, compared to third quarter net loss of $89.0 million, or $0.56 per diluted share, in 2008.
Lennar ’s new orders increased each month during the quarter and even though the firm still received eight percent fewer orders than it did in the third quarter of 2008, it ended the quarter with the highest backlog in a year, 2,475 orders . Lennar increased home starts, which will lead to higher deliveries during the fourth quarter. Lennar also experienced improvement in its cancellation rate from 27 percent to 19 percent.
Lennar’s strategy to ramp up production runs counter to the building industry as a whole. New home starts nationwide were up 1.5 percent in August over July but the increase was due entirely to an increase in multifamily starts; single family starts actually fell 3.0 percent in August. However, single family starts had risen for the previous five consecutive months. Single family starts are now 22 percent below the pace of a year ago industry-wide.
“Assuming the economy continues to stabilize, we believe our improved sales environment, increasing pre-impairment gross margins and ability to leverage S,G&A should enable us to return to profitability in fiscal 2010,” Miller said. Lennar’s fiscal year ends November 30.
Lennar builds starter, move-up and retirement homes in communities that cater to almost any lifestyle - such as urban, golf course, active adult or suburban communities. It builds homes in Arizona, California, Colorado, Delaware, Florida, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas and Virginia.
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