Lennar 3Q profit jumps as new orders climb

Associated Press Modified: September 24, 2012 at 10:00 am •  Published: September 24, 2012
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MIAMI (AP) — A rise in new orders and the number of homes delivered gave Lennar a boost as its net income more than quadrupled in the third quarter in part because of a tax benefit.

The homebuilder also reported a significant increase in backlog, a sign of potential future housing revenue.

Echoing sentiments similar to those expressed by KB Home on Friday, Lennar CEO Stuart Miller said in a statement on Monday that housing recovery is underway.

Lennar shares fell 63 cents. or 1.7 percent, to $36.88 in morning trading after rising as high as $38.27 earlier in the session, their highest level since June 2007. They are still about triple their low of $12.14 set in early October 2011.

Homebuilders are a bellwether for the housing market and the economy. While new homes represent less than one-fifth of the total housing market, construction of houses has a major impact on the economy.

Part of the reason consumers are getting back into the housing market is because of historically low rates. On Thursday mortgage buyer Freddie Mac said that the average rate on the 30-year loan declined to 3.49 percent from 3.55 percent last week. That matched the lowest rate since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, plunged to 2.77 percent, a record low.