© Reuters. FILE PHOTO: Signage is seen at The Collection at Morristown, a housing development by Lennar Corporation, in Morristown, New Jersey, U.S., November 13, 2021. REUTERS/Andrew Kelly/File Photo
(Reuters) – Lennar Corp (NYSE:) on Tuesday became the first major U.S. homebuilder to flag a slowdown in demand for new homes as red-hot prices and surging interest rates force many buyers to rethink purchases.
Any forecast at this point would amount to “guessing”, Lennar said, even as it maintained its home delivery expectations for the full year at about 68,000 homes.
“The Fed’s stated determination to curtail inflation through interest rate increases and quantitative tightening have begun to have the desired effect of slowing sales in some markets and stalling price increases across the country,” Lennar Executive Chairman Stuart Miller said in a statement.
Over the past two years, rising demand for homes from people working remotely during the pandemic drove up prices across the United States, pushing up profits for builders such as Lennar and D.R. Horton Inc.
Now, that profit growth is set to slow as rising mortgage rates and decades-high inflation eat into household income.
For the second quarter, however, the higher home prices and demand helped Lennar report a profit of $1.32 billion, or $4.49 per share, beating analysts’ expectations of $3.96 per share, according to Refinitiv IBES data.
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