U.S. homebuilder Lennar beats quarterly revenue on steady demand

(Reuters) -U.S. homebuilder Lennar Corp (NYSE:) on Thursday beat quarterly revenue estimates as tight supply of homes in the United States supported demand despite high mortgage rates.

Looking to the next year, the country’s second-largest homebuilder said production time to build a home was normalizing as its supply chain and the labor market improved. Production, or cycle, time in the fourth quarter fell 24% year over year.

The Florida-based homebuilder delivered 23,795 homes in the quarter ended Nov. 30, 19% more than a year earlier.

Existing home supply in the market remains tight as a majority of homeowners choose to stay locked in a fixed mortgage rate below 5%, making them unlikely to resell and upgrade at a time when current rates are hitting a two-decade high at about 7%.

The “rate-lock in” effect has been a tailwind for homebuilders this year, even as high home prices constrain affordability for many buyers.

Lennar’s higher delivery volumes, however, did not offset the impact from price reductions it offered to lure in customers. Its gross home sales margin fell to 24.2% from 24.8% a year earlier, and came in below the company’s forecast.

Shares of the company fell 2.8% to $150.50 in extended trading.

The company, which tends to be conservative on pricing and aggressive on sales, reported average selling prices per home at $441,000 in the fourth quarter, compared with $483,000 a year earlier.

Lennar’s net earnings attributable stood at $1.36 billion, or $4.82 per share, compared with $1.32 billion, or $4.55 per share, a year earlier.

It reported revenue of $11 billion, up from $10.17 billion, and above analysts’ estimates of $10.23 billion, according to LSEG data.