Lennar Pops on Housing Beat

After a historic year, Lennar’s growth just keeps going

BREAKING NEWS

Homebuilder Lennar is continuing their incredible run despite weaker Q4 guidance. Let's break down the incoming housing boom. 

WHAT HAPPENED

Lennar had a pretty historic run-up thanks to strong sales for the entire year—and especially since late October. Growth is finally decelerating a little and the buying frenzy is cooling off (for now). 

Lennar generated a solid $1.36 billion in net profit from $10.97 billion in revenue. They smashed expectations on both sides of the balance sheet, but their revenue beat was a little more resounding. New orders for homes rose 32% YoY while actual deliveries grew 19% to 23,795 homes.

FIND YOUR LEVEL

Growth and financial performance like this are hard to come by in the inflation-rattled homebuilding market, so Lennar has already had strong growth all year. Now, Lennar’s Q4 guidance came in slightly weaker than expected, with expectations for the company to deliver up to 22,500 homes and generate as many as 17,200 new orders The bottom end of both of those estimates came back lower than market expectations. Lennar stock rose 13% this week on the back of the Fed’s plan to cut rates 3 times in 2024—as lower rates will allow for higher mortgage demand and therefore higher home sales.

WHY IT MATTERS

It’s been a really strong week for the housing market as the promise of lower interest rates potentially makes homebuying a little more affordable. Mortgage demand is up while mortgage rates are already falling. Of course, when the Fed actually does cut interest rates, that will introduce a whole new level of competition to the housing market as more folks pile-in and try to buy a very limited supply of homes. That prospect almost certainly leads to higher home prices, which will benefit builders like Lennar really well. While there’s some pullback as Lennar simply cannot keep up with demand, homebuilders like Lennar are getting set up for a great year. Lennar is up over 50% since October, but the stock fell over 2% by the end of trading.