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Lennar 4Q net income falls, new orders rise

Homebuilder Lennar's 4Q net income falls on expenses; new orders and home deliveries climb

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Lennar Corp., the nation's third-largest homebuilder, says the housing market is starting to stabilize because of low home prices and low interest rates, making it more appealing to consumers to buy.

The homebuilder reported Wednesday that its fiscal fourth-quarter revenue rose as it delivered more homes, but its net income dropped 5 percent.

Lennar shares rose $1.49, or 7.2 percent, to close at $22.25 Wednesday after touching a 52-week high of $22.53 earlier in the session. That is 85 percent above their low for the past year of $12.14 set in early October.

"We have navigated the turbulent waters of the U.S. economy and the housing market," Lennar CEO Stuart Miller said in a conference call with investors. "As I look ahead to 2012, I am cautiously optimistic we have seen a bottom formed and we will start to see a market recovery."

Homebuilders are a bellwether for the housing market and the economy. While new homes represent less than one-fifth of the total housing market, construction of houses has a major impact on the economy. Each new home creates an average of three jobs and generates $90,000 in taxes, according to the National Association of Home Builders.

For the period ended Nov. 30, Lennar reported net income of $30.3 million, or 16 cents per share. That's down from $32 million, or 17 cents per share, a year ago.

This was the Miami company's seventh straight quarterly profit, but its performance narrowly missed the 17 cents per share that analysts polled by FactSet predicted.

Selling, general and administrative expenses increased to $112.5 million from $102 million. Corporate, general and administrative expenses rose to $28.5 million from $25.1 million.

Revenue climbed 11 percent to $952.7 million from $860.1 million, well above Wall Street's estimate of $874.6 million.

Revenue for its Rialto Investments unit, which buys troubled loans and properties from banks, more than doubled to $46.5 million from $19.7 million.

Lennar, which sells homes for entry level and move-up buyers as well as retirees, said home deliveries rose 9 percent to 3,375 homes. The average home sales price climbed to $243,000 from $238,000 a year earlier, with sales incentives offered rising slightly to $33,900 per home delivered from $33,700 per home delivered.

New orders increased 20 percent to 3,027 homes, while backlog rose 35 percent to 2,171 homes.

For the full year, Lennar reported net income of $92.2 million, or 48 cents per share. That compares with earnings of $95.3 million, or 51 cents per share, in the previous year.

Annual revenue rose 1 percent to $3.1 billion from $3.07 billion.

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Kravitz reported from the Washington, D.C., bureau while Chapman works in New York.

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