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Insights on the Real Estate Market from Lennar Corp
This morning, Lennar Corp $LEN, a home construction and real estate company, reported its Q3 2021 earnings. The company's earnings call delivered several insights into the current state of the real estate market. Here are some of the quotes that jumped out to me:
- The real estate market is still strong: "From a macro perspective, the housing market remains strong, and these continue to be the best of times. Demand has been consistently strong, while the supply of new and existing homes remains limited. Since new home construction cannot ramp quickly enough to fill the void of the production deficit that persisted over the last decade, short supply is likely to remain for some time to come."
- Supply constraints continue to affect homebuilders: "The supply chain for both land and construction is significantly stressed and that will continue into the fourth quarter and beyond. Accordingly, we expect our community count at the end of the year will be up only approximately 7% versus the 10% we previously guided, and our deliveries will be approximately 18,000 a versus the 19,000 to 21,000 we previously guided."
- Gross margin expansion indicates strong pricing power by homebuilders: "Even with the supply chain constraint, we still grew our deliveries 10% year-over-year, while our revenues from home sales grew 19% to over $6.5 billion. And by remaining focused on orderly targeted growth, with our sales pace tightly matched with our pace of production, we drove a 420 basis point gross margin improvement from 23.1% last year to 27.3% this year."
The U.S. real estate market might have cooled down a bit from a couple of months ago, but the market trends that favor builders and sellers will likely stay a while longer. $EQR $AVB $IRT $ACC $CPT $MAA
If you'd like to read the full earnings call, here's the URL: Lennar Corp Q3 2021 Earnings Call
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