Homebuilder shares up after Lennar report

Shares of major U.S. homebuilders rose Thursday after Lennar Corp.'s second-quarter earnings report showed a significant spike in sales of completed homes and new orders compared with the prior three-month period.

Lennar reported Thursday a 47 percent increase in sales of completed homes and a 63 percent jump in orders from the first quarter. Lennar also reported a 15 percent cancellation rate for the second quarter, considerably smaller than the 22 percent posted in the same quarter last year.

Revenue dropped to $891.9 million from $1.13 billion on a year-over-year basis, but the Miami-based builder still managed to beat Wall Street's $597.5 million revenue estimate.

All that news sent Lennar's shares up as much as 18 percent after closing at $7.82 per share on Wednesday. Lennar rose $1.15, or 14.7 percent, to $8.97 in afternoon trading.

Investors in other homebuilders appeared motivated by Lennar's results. KB Home rose 88 cents, or 6.5 percent, to $14.52, while Centex Corp. gained 43 cents, or 5.3 percent, to $8.54. Pulte Homes Inc. was up 35 cents, or 4.2 percent, to $8.82, and Toll Brothers Inc. increased 48 cents, or 3 percent, to $16.72.

The positive news in Lennar's report seemed to overshadow the company's slightly larger loss from last year's second quarter. Lennar lost $125.2 million, or 76 cents a share, for the three months ended May 31. Lennar posted a loss of $120.9 million, or 76 cents a share, in the second quarter last year.

The quarterly loss included 38 cents per share for adjustments in the value of land and inventory, and a 27 cents-per-share charge related to tax asset values.

Despite the improvement from this year's first quarter, home deliveries were down 18 percent and new orders fell 19 percent when compared with the second quarter of 2008. The average sales price slid about 8 percent to $251,000.

Lennar's report came a day after the Commerce Department said new U.S. home sales dipped 0.6 percent in May to a seasonally adjusted annual rate of 342,000, from a downwardly revised April rate of 344,000. The results fell far short of economists' forecasts.

In a research note, Raymond James analyst Buck Horne wrote that Lennar's second-quarter loss was smaller that his estimate of 80 cents per share, partly due to more deliveries, lower expenses as a percentage of revenues, and a slower cancellation rate than expected.