(Reuters) – Lennar Corp (NYSE:LEN) missed Wall Street estimates for fourth-quarter profit and revenue on Wednesday, as potential buyers remained reluctant to buy homes due to volatile mortgage rates, sending its shares down 7.5% in aftermarket trade.
The second-largest U.S. homebuilder by sales posted adjusted earnings of $4.06 per share for the quarter, below analysts’ estimates of $4.16 per share, according to data compiled by LSEG.
The U.S. housing market has struggled to rebound after being knocked down by a resurgence in mortgage rates in the spring.
The 30-year fixed mortgage rate tracks the benchmark 10-year Treasury note, whose yield jumped to a four-month high in the aftermath of Republican Trump’s victory in the U.S. presidential race.
As per a Reuters poll of property experts, purchasing affordability for first-time U.S. homebuyers is expected to worsen over the coming year on tight supply and fewer-than-expected Federal Reserve interest rate cuts, even as the increase in average home prices is slowing down.
“Even while demand remained strong and the chronic supply shortage continued to drive the market, our results were driven by affordability limitations from higher interest rates,” Lennar’s co-CEO Stuart Miller said.
Lennar’s average sales price of $430,000 for the quarter fell from $441,000 a year earlier, owing to adjustments in prices caused by an increased use of incentives and a changing product mix.
The company expects to deliver 17,000 to 17,500 homes in the first quarter of 2025. Its deliveries fell 7% to 22,206 homes in the fourth quarter ended November 30.
Lennar reported home sales gross margins of 22.1% in the quarter compared with 24.2% in the previous year.
Its fourth-quarter revenue fell to $9.95 billion, below analysts’ estimate of $10.08 billion.