Lower-priced home sales drive Lennar’s Q4 revenue

New home orders rose 23% in Q4, year-over-year

Lennar's Stuart Miller and a Lennar home (Credit: Lennar and iStock)
Lennar's Stuart Miller and a Lennar home (Credit: Lennar and iStock)

Despite past indicators of a housing market slowdown, Lennar Corp. reported an uptick in fourth-quarter sales, as it pushes to sell lower-priced homes.

The Miami-based homebuilder’s new home orders jumped 23 percent, year-over-year, in the latest quarter, to 13,089 homes. Home deliveries rose 16 percent to 16,391 homes.

As a result, Lennar reported fourth quarter revenue up 7 percent to $6.9 billion, compared with $6.45 billion in the same period of 2019.

Lennar’s revenue jump reflects its move toward selling lower-priced homes, a segment in which demand from homebuyers remains strong. The average sale price of Lennar’s homes delivered in the fourth quarter decreased 7 percent to $393,000 from $421,000 in the fourth quarter of 2018, according to a release.

“It’s probably the most supply constrained [housing segment],” Lennar Executive Chairman Stuart Miller told analysts during an earnings call on Wednesday.

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Lennar’s fourth quarter net income dropped to $674.3 million, or $2.13 per share, from $796.1 million, or $2.42 per share in the fourth quarter of 2018. But fourth quarter 2018 earnings included a gain of $187.5 million related to the sale of Rialto’s investment and asset management platform.

Lennar’s results pushed the company’s stock up 1.7 percent to $58.14 at 2 p.m on Wednesday. Other homebuilders’ shares also rose. DR Horton’s stock increased 1.1 percent and Toll Brothers’ shares ticked up 1.61 percent.

In the past two years, national indicators showed that the post-recession housing boom would come to an end, but Lennar executives say the housing market is still on solid footing.

“During the fourth quarter, the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remained favorable,” Rick Beckwitt, Lennar’s CEO, told analysts.

Lennar, one of the nation’s largest homebuilders, is known for its “Everything’s Included” model, which allows little customization in homes but a consistent standard product that keeps its costs low. In many areas, including South Florida, the company has gained a reputation as one of the most aggressive land buyers.