U.S. homebuilder Lennar Corp posted a wider year-over-year quarterly net loss, but saw a sequential rise in new home sales and orders, sending its shares up almost 10 percent in early trade.
During the second quarter, the housing market experienced a rise in sales of new homes, compared to the first quarter, as more confident homebuyers took advantage of increased affordability, Chief Executive Stuart Miller said in a statement.
Declining home prices, low interest rates and government stimulus programs created purchasing opportunities and made it more compelling for homebuyers to enter the market, he added.
Second-quarter new home deliveries rose 47 percent, while new orders were up 63 percent sequentially. Cancellation rate fell to 15 percent from 22 percent a year ago.
While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry, CEO Miller noted.
This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner, he added.
Second-quarter loss was $125.2 million, or 76 cents a share, compared with a loss of $120.9 million, or 76 cents a share a year ago. Revenue fell 21 percent to $891.9 million.
On a comparable basis, analysts were looking for a loss of 70 cents a share on revenue of $599.5 million, according to Reuters Estimates.
The quarterly loss included charges of 38 cents a share related to valuation adjustments and other write-offs, and 27 cents a share on a non-cash deferred tax asset valuation allowance, Lennar said.
The company ended the quarter with $1.4 billion in cash, helped by cutting down its completed, unsold inventory by 53 percent to 626 homes at February 28.
Lennar shares were up almost 10 percent at $8.57 in morning trade on the New York Stock Exchange.
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