Lennar orders jump, says housing market stabilizing

A Lennar model home is open for customers in a new neighborhood in the Denver suburb of Thornton, Colorado March 29, 2011.

(Reuters) - Lennar Corp (LEN.N), the third-largest U.S. homebuilder, reported a third straight quarter of order growth and said the housing market is bottoming out after a prolonged downturn.

Shares of the company jumped 9 percent to a three-and-a-half year high of $22.52 on Wednesday on the New York Stock Exchange.

They pared some gains and were trading up 7 percent at $22.22. About 1.2 million shares changed hands, more than their daily average volume.

Stocks of other homebuilders, such as KB Homes (KBH.N), PulteGroup (PHM.N) and DR Horton (DHI.N), were also up.

The S&P homebuilding sub-industry index .GSPHOME was up 5 percent, while the broader market .SPX was down slightly.

"As I look ahead to 2012, I am cautiously optimistic that we are seeing a real bottom form, and we will begin to see signs of recovery," Lennar CEO Stuart Miller said on a conference call.

Lennar said high rental rates were driving customers to buy new homes, and low home prices and low interest rates were helping.

The company was experiencing more traffic in its welcome home centers and customers were opting to buy new homes as rising rental rates bite, Miller said.

The meltdown in the U.S. housing market triggered the 2007-09 recession, but home building has grown in the last two quarters and housing starts and building permits jumped to a 1- high in November.

Miami-based Lennar, the largest U.S. homebuilder behind D.R. Horton and PulteGroup Inc, reported a 20 percent jump in new home orders for the September-November period and said the market was beginning to stabilize.

Orders are a key indicator for builders who do not book revenue until they close on a house.

In December, KB Homes, the fifth-largest U.S. homebuilder, said orders jumped 38 percent, with the greatest increases in higher-priced West Coast markets.

Lennar CEO Miller said some housing markets were experiencing a fundamental change as foreclosure inventories have been absorbed.

Lennar's fourth-quarter net income was $30.3 million, or 16 cents a share, down from $32.0 million, or 17 cents a share, a year ago.

Revenue rose 11 percent to $952.7 million. Backlog was up 35 percent at the end of the quarter.

The homebuilder's profit was hurt by its Rialto Investments segment, which focuses on distressed real estate asset investments and asset management. The company is one of the few to start a distressed land operation.

(Reporting by A. Ananthalakshmi in Bangalore; Editing by Maju Samuel, Unnikrishnan Nair)