Lennar Corp (NYSE:LEN) stock fell 2.73% (As on June 18, 11:15:10 AM UTC-4, Source: Google Finance) after the company forecast its third-quarter home deliveries below analysts’ estimates, a sign that demand for new homes is expected to remain sluggish as mortgage rates hover at a two-decade high. With the current 30-year fixed mortgage rate nearly at 7%, many homebuyers are being priced out of the market, prompting homebuilders to cut base home prices and dish out incentives such as mortgage rate buydowns, or reductions on home loan rates, to maintain sales pace. Lennar has cut average price per home to $426,000 in the quarter ended May 31, from $449,000 a year ago. It delivered 19,690 homes during the period, versus 17,885 units a year earlier. Further, existing housing supply also remains tight as a majority of homeowners are unwilling to resell their homes, having locked down home loan rates below 5% during an era of cheap debt. Second quarter net earnings attributable to Lennar in 2024 were $954 million, compared to second quarter net earnings attributable to Lennar in 2023 of $872 million.

LEN in the second quarter of FY 24 has reported the adjusted earnings per share of $3.45, beating the analysts’ estimates for the adjusted earnings per share of $3.24. The company had reported the adjusted revenue of $8.77 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $8.52 billion. Revenues from home sales increased 9% in the second quarter of 2024 to $8.4 billion from $7.6 billion in the second quarter of 2023. Revenues were higher primarily due to a 15% increase in the number of home deliveries, partially offset by a 5% decrease in the average sales price of homes delivered. New orders increased 19% to 21,293 homes and there is backlog of 17,873 homes with a dollar value of $8.2 billion. Operating earnings for the Financial Services segment were $146 million in the second quarter of 2024, compared to $112 million in the second quarter of 2023.

Additionally, during the quarter, the company had repurchased $603 million of our common stock and repaid $554 million of senior notes ending the quarter with homebuilding debt to total capital of 7.7%, no borrowings on the $2.2 billion revolver and cash of $3.6 billion.

The company forecast its third-quarter home deliveries to be between 20,500 and 21,000, the midpoint of which is marginally below analysts’ estimate of 20,917 units, according to LSEG data.