Lennar Corp., the third-largest U.S. home builder by stock market value, said fiscal second-quarter profit increased 16 percent as near record-low mortgage rates spurred Americans to buy new homes at the fastest pace ever.

Profit from continuing operations for the three months ended May 31 rose to $233.2 million, or $1.42 a share, from $201.2 million, or $1.22, a year earlier, the Miami-based company said in a statement Tuesday. Revenue from continuing operations rose 25 percent to $2.9 billion.

U.S. new home sales set a monthly record in April as the average rate for a 30-year fixed loan fell to almost a 45-year low. New home sales will climb 3.2 percent to a record 1.24 million this year, according to a June 8 forecast from the National Association of Realtors in Washington.

"Mortgage rates have stayed low -- that's getting some people into a house and helping others to buy more expensive homes than they would have otherwise," said Daniel Poole, assistant director of equity research at National City Corp., owner of 352,000 Lennar shares.

The average U.S. rate for a 30-year fixed mortgage was 5.63 percent last week, compared with the record 5.21 percent for the week ended June 13, 2003, according to Freddie Mac, the second- largest U.S. mortgage company.

The rate may average 5.64 percent in 2005, falling from 5.84 percent last year, according to a June 16 Fannie Mae forecast, the largest U.S. mortgage company. That would be the lowest annual average ever.

Analysts expected Lennar to earn $1.28 for the fiscal second quarter, based on the average of 13 estimates in a Thomson Financial survey. Net income for the quarter was $243.5 million, or $1.48 a share. It included a gain of 6 cents a share from the sale of the company's title insurance unit.

Lennar's stock rose $1.34, or 2.2 percent, to $63.41 in composite trading on the New York Stock Exchange. The shares have increased 45 percent in the past 12 months, compared with a 7.4 percent gain in the S&P 500 Index.

The company earned $201.4 million, or $1.22 a share, in the year-earlier quarter.

Lennar increased its earnings target for the fiscal year to $7.67 a share from an earlier forecast of $7.15. That 35 percent increase would make it the largest gain since 2001 when it was 65 percent. Analysts expected full-year earnings of $7.21 a share, according to Thomson Financial.

Lennar sold 8,951 homes in the quarter, a gain of 15 percent from a year earlier. The average price was $293,000, up 10 percent. The backlog, the value of homes ordered and not yet delivered, rose to $7.3 billion, a gain of 25 percent from a year earlier.

"The company is firing on all cylinders, but also the home-building industry in general is firing on all cylinders," Lennar Chief Executive Stuart Miller said.

Last week, KB Home, the sixth-largest U.S. home builder, posted a 78 percent surge in second-quarter earnings

Article © Anywhere Communications All Rights Reserved