Lennar Expects Housing Recovery to Continue Despite Raising Interest Rates

By Austen Hufford

Home builder Lennar Corp. posted another quarter of key metric gains as the U.S. housing market continues to recover.

The company also said that it expects the incoming Trump administration to "focusing on accelerating economic growth."

Still, Lennar warned that it would face rising interest rates in the coming years. The Federal Reserve decided to raise the federal-funds target rate by a quarter of a percentage point last week, which means borrowing will get more expensive for consumers.

Chief Executive Stuart Miller said the housing market continues a "slow and steady recovery."

Gross margin on home sales fell to 23.3% from 24.6% on rising land and construction costs.

The number and average price of homes delivered rose in the quarter, driving revenue growth. The number of deliveries rose 7.5% for the fourth quarter from a year before as the average price of a delivered home increased 2.6% to $358,000.

The number of new orders increased 9%.

In recent quarters, the company's results had been hurt by its Houston segment, whose large energy sector has been challenged by low energy prices in recent quarters. The company said that unit would be reported as part of its larger Homebuilding Central segment as it no longer meets the criteria for separate reporting.

Lennar reported a quarterly profit of $313.5 million, or $1.34 a share, up from $281.6 million, or $1.21 a share, a year prior. Analysts polled by Thomson Reuters projected $1.28 in per-share profit

Revenue grew 15% to $3.38 billion.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

December 19, 2016 07:34 ET (12:34 GMT)

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