* Lennar earnings $0.54 per share vs est $0.45
* Lennar orders jump 14 pct to 4,785 houses
* KB Home third-quarter earnings $0.30 vs est $0.21
* Lennar shares up 6 pct; KB Home shares rise 7 pct
By Bijoy Anandoth Koyitty
Sept 24 Lennar Corp and KB Home
posted strong quarterly earnings as scarcity of new homes kept
the U.S. housing recovery firmly on track.
U.S. homebuilders have been under pressure since May when
interest rates started rising on fears that the Federal Reserve
would taper bond purchases, but the sector got a short-term
relief last week when the Fed extended its monetary stimulus.
Lennar shares rose 5.5 percent to $36.46 in afternoon trade
on the New York Stock Exchange. Shares of KB Home were up 7
percent at $18.30.
Lennar Chief Executive Stuart Miller said that although the
year has witnessed significant building activity, supply would
still fall short of demand by a wide margin.
"Builders ... have been pushing to increase production as
inventories of rentals, existing homes, and new homes, have
remained extremely low and pricing for all of these products
have been moving up," Miller said on a post-earnings call.
Lennar, the No. 3 U.S. homebuilder, said orders for new
homes rose 14 percent in the third quarter, compared to a 27
percent increase in the second quarter.
Wall Street Strategies analyst David Urani said "14 percent
is still pretty good," considering the mortgage rate impact.
"Interest rates are more of a near-term thing and sort of a
speed bump. If you are going to abandon homebuilders because of
that, then you are taking too much of a short-term outlook,"
U.S. housing starts rose less than expected in August amid a
sharp slowdown in the multifamily sector, but a surge in permits
for single-family homes pointed to sustained strengthening in
the housing market recovery.
Homebuilders are also getting aggressive on land
acquisitions as a dearth of developed land constrain their
ability to cater to rising demand.
Miami-based Lennar is better positioned than most to
continue building houses as it got back into the game early
following the housing crisis and has actively bought land over
the past several years.
Miller said on the call that Lennar's land bank would help
the company meet its projected deliveries through 2014 and much
"As a result, we are pursuing land opportunities for 2015
and beyond," he said.
ORDERS, BACKLOG JUMP
Orders, a key indicator for builders who do not book revenue
on a house until the sale is complete, jumped to 4,785 houses in
the third quarter, Lennar said.
Lennar's backlog - houses ordered but not yet finished -
rose 32 percent to 5,958 in units and 53 percent to $1.9 billion
KB Home said its net orders rose 7 percent to $528.9 million
from a year earlier, in terms of value.
Lennar posted net income of $120.7 million, or 54 cents per
share, in the third quarter from $87.1 million, or 40 cents per
share, a year earlier.
This beat analysts' average expectations of 45 cents per
share on revenue of $1.56 billion, according to Thomson Reuters
KB Home reported quarterly earnings of 30 cents per share,
above analysts' average expectations of 21 cents per share.
The strong results from Lennar and KB Home also drove a 4
percent rise in the Dow Jones Home Construction index.