No. 3 U.S. homebuilder Lennar reported a first-quarter profit well above market expectations as lower interest rates and rising rents boosted home sales.
The housing market in the United States has been recovering steadily after falling into a deep rut six years ago, encouraging builders to undertake new projects.
Groundbreaking to build U.S. homes rose in February and new permits for construction climbed to the highest level since 2008, a sign the housing market recovery is gathering steam.
Lennar reported a 28 percent spike in home sale closings and a 13 percent rise in average sale prices, pushing revenue by 37 percent to $989.9 million.
Backlog at the end of the quarter was worth $1.5 billion as new orders rose 34 percent to 4,055 homes.
Low home inventories and fewer competing homebuilders have created a supply crunch, driving up prices for new homes, the company said.
"Against this backdrop of recovery in the housing market, we have continued to be a very active land purchaser spending almost $500 million on land in the first quarter," Chief Executive Stuart Miller said in a statement.
Rival D.R. Horton Inc. said in January that new home inventory in the United States was among its lowest levels in five or six years.
Toll Brothers Inc., the largest U.S. luxury homebuilder, reported a 49 percent quarterly rise in new orders last month. The company has benefited as some small and medium-sized private builders have been constrained for capital.
Lennar's net income rose nearly three-fold to $57.5 million, or 26 cents per share, in the quarter ended February 28, from $15 million, or 8 cents per share, a year earlier.
Analysts on average expected earnings of 15 cents per share on revenue of $898.4 million, according to Thomson Reuters I/B/E/S.
Lennar said earlier this year that it planned to venture into the apartment rental market to take advantage of a supply crunch.
The Miami-based company's shares were up 2 percent before the bell. They closed at $41.42 on the New York Stock Exchange on Tuesday.
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