No. 2 U.S. homebuilder Lennar on Wednesday reported a much lower than expected quarterly profit due to a delay in the booking of a single large transaction, although orders rose and revenue topped estimates.
The company’s shares were down 4.8 percent at $63.50 in light premarket trading.
An 11.5 percent rise in orders pointed to a robust U.S. real estate market, with buyers signing up for 7,357 homes in the quarter ended Nov. 30. The average selling price for home deliveries rose 8.4 percent to $388,000 for the fourth quarter.
Lennar’s orders have climbed for seven straight years on a year-over-year basis, as the U.S. housing market recovered from the sub-prime crash of 2007-2008.
“Our results … benefited from strong demand for homes, low unemployment, favorable interest rates and increased consumer confidence,” Lennar Chief Executive Stuart Miller said in a statement.
“General enthusiasm for the strength of the economy, combined with the added tailwinds of recent tax law changes, continue to propel the housing market forward.”
In October, Lennar agreed to buy smaller rival CalAtlantic Group for $5.7 billion in a deal that will make it the largest homebuilder in the United States and give it more tools to deal with higher labor and land costs.
The move reflected the pressure on builders due to a shortage of skilled labor that is constraining the supply of homes and pushing costs up even as U.S. house prices rise for a seventh straight year.
In the fourth quarter, Lennar’s gross margin on home sales fell to 22.4 percent from 23.3 percent a year earlier, underscoring higher land and labor expenses.
Lennar’s total revenue rose 12.1 percent to $3.79 billion, beating the average analyst estimate of $3.57 billion, according to Thomson Reuters I/B/E/S.
Net income attributable to Lennar fell 1.2 percent to $309.6 million, or $1.29 per share, missing the average estimate of $1.48 per share. The company blamed the shortfall on its moving of a “strategic” deal into the first quarter of 2018, without giving any details on the deal.
Up to Tuesday’s close, Lennar’s stock had risen 55.7 percent in the past 12 months, compared with a 49.8 percent increase in the PHLX Housing Index.