Lennar Profit Beats Estimates as Sales Gain at Higher Prices

Lennar Corp., the second-biggest homebuilder by stock-market value, reported fiscal third-quarter earnings that beat analysts' estimates as it sold more homes at higher prices.

Net income in the three months through August was $177.8 million, or 78 cents a share, compared with $120.7 million, or 54 cents, a year earlier, the Miami-based company said in a statement today. The average of 20 analyst estimates was for earnings of 67 cents a share, according to data compiled by Bloomberg.

Lennar has boosted earnings by raising prices and using its large size to save money on materials and land purchases as demand for new houses remains uneven. The builder's third-quarter orders rose 23% to 5,889 homes with a value of $1.9 billion from 4,785 homes and $1.5 billion a year earlier.

"Lennar appears to have pulled off in its fiscal third quarter what others have not yet been able to this summer: strong orders, growing average selling prices, and strong gross margins," Megan McGrath, an analyst with MKM Partners LLC, said in a note to clients today after the earnings were released.

The shares jumped 5.8% to $41.39 at 10:23 a.m. in New York, the biggest intraday gain since February. Lennar was the best performer in the Standard & Poor's Supercomposite Homebuilding Index, which climbed 3.5%.

Revenue climbed 26% to $2 billion. The number of houses delivered rose 9% to 5,457. The average price of homes delivered increased to $332,000 from $291,000.

Toll Brothers Inc., the largest builder of luxury homes, and Hovnanian Enterprises Inc., a builder in 17 states, reported this month that their orders in the most recent quarter fell from a year earlier.

New-home sales fell to a four-month low in July as the average price reached a record $339,100, the Commerce Department reported last month.

Confidence among homebuilders rose to a nine-month high in September, a sign the industry is gaining ground, a National Association of Home Builders/Wells Fargo index showed today. The measure climbed to 59 from 55 in August. Readings above 50 mean more respondents said conditions were good.

Lennar, the largest homebuilder after D.R. Horton Inc., builds homes for first-time and move-up buyers, retirees and multiple-generation households in 18 states. It also invests in apartments, master-planned communities, mortgage financing and commercial real estate.