“We are anticipating a robust spring selling season which historically starts just after the Super Bowl,” says Lennar’s chief executive Stuart Miller.
The CEO also noted during a conference call on Lennar’s yearend results that Fannie Mae and Freddie Mac are expected to raise their guarantee fees next year and lower their loan limits. In addition, mortgage rates are likely to rise going forward.
Despite these headwinds, “we feel the short supply of available homes and pent-up demand, along with an improving economy will continue to drive the housing recovery forward,” Miller says.
Lennar delivered 18,290 new homes in fiscal year 2013 (which ended Nov. 30), up 33% from FY 2012. The Miami-based homebuilder ended the fiscal year with a backlog of 4,800 orders for new homes.
Meanwhile, Lennar Financial Services originated $1.3 billion in mortgages in FY 2013, down just 9% from the prior year. Miller noted that refinancings “all but evaporated” in the final quarter.
Its origination mix has shifted to 93% purchase transactions and only 7% refinances.
The builder’s mortgage unit reported operating earnings of $17 million for 4Q, compared to $33.2 million a year ago.
The decline in refinancings hurt earnings as well as “margin compression as more competitors focus on the purchase business,” a Lennar executive said during Wednesday’s conference call.