(Reuters) - Lennar Corp LEN.N on Wednesday forecast 2020 home sales above analysts' estimates, encouraged by strong demand on the back of lower home prices and mortgage rates, sending its shares up 3%.
The U.S. No. 2 homebuilder said it expects to deliver between 54,000 and 55,000 homes in 2020. Analysts on average were expecting 53,954 unit sales, according to IBES data from Refinitiv.
Lennar also forecast full-year gross margins to be in the range of 20.5% to 21.0%, above analysts’ estimates of 20.30%, adding that it was reducing its construction spend and that labor and raw material costs remained relatively flat.
The U.S. housing market has been steadily rising, driven by the Federal Reserve’s three interest rate cuts last year, pushing down mortgage rates from multi-year highs in 2018.
“During the fourth quarter, the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remained favorable,” Chief Executive Officer Rick Beckwitt said in a statement.
The company topped estimates for fourth-quarter profit and revenue as it sold 16,420 homes in the quarter, up from 14,154 homes a year ago, while the average price fell 6.7% to $393,000.
Orders, which indicate future demand, rose 23.4% to 13,089 homes in the quarter.
Sales of new U.S. single-family homes rose in November, and December saw confidence among homebuilders reaching levels last seen in June 1999.
Net income attributable to the company fell to $674.3 million, or $2.13 per share, in the quarter ended Nov. 30, from $796.1 million, or $2.42 per share, a year earlier.
Revenue rose 8% to $6.97 billion.
Analysts on average had expected earnings of $1.90 per share on revenue of $6.55 billion.
Lennar, whose shares rose 42.5% in 2019, was trading at $58.90 before the opening bell.
Reporting by Dominic Roshan K. L. and Sanjana Shivdas in Bengaluru; Editing by Maju Samuel
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