Lennar is the IBD Stock Of The Day Friday, with the luxury homebuilder advancing near an early entry point as federal data suggests strong demand for new construction projects. Lennar stock edged up Friday.
Last month, the Commerce Department reported single-family homebuilding fell in June while permits for future construction jumped to a 12-month high. Meanwhile, last week, the Commerce Department added that construction spending increased 3.5% vs. 2022 in June. Spending on private construction projects increased 0.5%, with investment in residential construction rising 0.9% after rebounding 2.9% in May.
Lennar Stock In Focus Amid Housing Shortage
This could be good news for Miami-based luxury homebuilder Lennar, as the U.S. continues to be in a long-term housing shortage, with the construction of new homes failing to keep pace with the growing population.
The U.S. housing market in 2023 has also taken a hit as the Federal Reserve hiked interest rates, driving up mortgage rates. This kept existing homes off the market, driving additional demand for newly built homes.
The Commerce Department releases July housing starts and building permits data on Aug. 16.
In mid-June Lennar reported better-than-expected fiscal second-quarter profits and sales. LEN earnings decelerated over the past four quarters from a 59% jump in Q2 last year to a 33% decline in Q2. Revenue gains slowed from 30% growth in the second quarter last year to a 4% decrease in Q2.
Lennar also updated its outlook in June, expecting to deliver 17,750-18,250 homes in the current fiscal quarter with gross margins between 23.5% and 24%.
For the full year, Lennar forecasts deliveries of between 68,000 and 70,000 homes, up from its prior guidance of 62,000 to 66,000.
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Lennar Stock Analysis
LEN shares gained 2.7% to 125.99 amid lower-than-average volume Friday during market trade. Lennar stock has jumped around 39% so far in 2023. The broader IBD Building-Residential/
LEN shares bounced off their 50-day moving average, putting it in a potential buy range. Another option: if Lennar stock makes a decisive move above its 21-day line, breaking the short downtrend, it could offer another early entry.
