(Reuters) -Homebuilder Lennar Corp on Tuesday reported a better-than-expected quarterly profit as high property prices helped offset supply shortages caused by rising material costs and a labor crunch.
Shares of the company rose 3.5% to $104.3 after the bell.
Home demand shot up across the United States when pandemic-era remote work trends allowed people to look for more affordable properties away from big cities, boosting the margins of homebuilders such as Lennar and D.R. Horton Inc.
However, the industry is now staring at a slowdown as high interest rates have made borrowing more difficult for potential buyers.
Last month, data showed that the average interest rate on the most popular U.S. home loan rose to its highest since November on concerns that the Federal Reserve might have to continue tightening policy through the summer to subdue inflation.
“Our sales volume and pricing have clearly been impacted by rising interest rates, but there remains a significant national shortage of housing, especially workforce housing, and there is still demand,” Lennar Executive Chairman Stuart Miller said in a statement.
The company’s new orders fell 10% to 14,194 homes in the first quarter.
Lennar reported net earnings per diluted share, excluding items, of $2.12 per share, above analysts’ average estimate of $1.55 per share, according to Refinitiv data.
Revenues rose 5% to $6.49 billion, compared with estimates of $5.93 billion.
(Reporting by Priyamvada C and Kannaki Deka in Bengaluru; Editing by Devika Syamnath)