Lennar Corp., seen as a bellwether for the U.S. housing market, is actually seeing some benefits from the pandemic.
The Miami-based homebuilder’s executive chairman Stuart Miller said on its earnings call on Tuesday some buyers from the urban core are seeking out Lennar’s suburban homes.
During a conversation with Lennar’s Southeast Florida division president, Carlos Gonzalez, Miller said “31 percent of his (Gonzalez’s) sales have come from the city of Miami to the suburban areas. We are hearing that kind of empirical data.”
Yet, Lennar still reported that new home sales in the second quarter remained largely the same as in the previous year. New home deliveries totaled 12,653 homes in the second quarter, a slight decrease from 12,706 homes in the second quarter of 2019.
The company’s home revenue decreased 5 percent in the second quarter, year-over-year, to $4.9 billion.
Home revenue largely dropped due to the decline in the average sales price of homes. The average home sale price decreased to $389,000 in the second quarter of 2020, compared to $407,000 in the second quarter of 2019.
Company executives said Lennar was able to continue to sell homes during the pandemic due to low mortgage rates and a shortage of reasonably priced single-family homes. Rick Beckwitt, the company’s CEO, said new home orders increased 20 percent during the first two weeks of June. The company also reissued its guidance for 2020 after it canceled guidance in the first quarter due to the coronavirus pandemic.
“The market is strong and will remain strong as we go forward,” Miller said.
Overall, Lennar reported earnings of $517.4 million in its second quarter, up from $421.5 million in the second quarter of 2019.
Lennar’s stock was down 1.1 percent to $62.87 as of 1:56 p.m. on Tuesday.
Lennar is known for its simple, no frills, affordably priced homes. The company has reported strong earnings in the past few years as a housing shortage has led to strong demand for new single-family homes.
Lennar is seen by analysts as a bellwether for the broader U.S. housing market and for how the industry and the housing market will fare during the crisis.
The single-family housing market hasn’t been impacted by coronavirus as much as some predicted. Nationally, home prices increased by 5.4 percent in April, compared with April 2019, according to CoreLogic. But in 2021, home prices are expected to decline for the first time in more than nine years, the data provider reported.