According to the Houston Chronicle, LGI Homes, the Texas builder of affordable homes is showing a 12% increase in profits for the third quarter thanks to a lower effective tax rate. Home closings were down 7.4% during the same period which the company attributes to consumers worrying about rising mortgage rates and affordability.
"We continued to see strong demand and increased traffic in our information centers, from renters wanting to convert to homeownership, proving that buyer interest levels are still high," said CEO and Chairman Eric Lipar. "Our focus on keeping margins consistent and offsetting rising costs, coupled with rising interest rates, has created some challenges around affordability, ultimately slowing our absorption pace in recent months."
During the third quarter, LGI's net income was $37.7 million, or $1.52 per share, on home sales revenue of $380.4 million, up 4 percent over last year. The company closed 1,601 homes during the quarter, with an average sales price of $237,582, compared with 1,729 closings at an average price of $211,623 a year ago.
The company attributed the sales decline to its Central and Florida divisions, where it closed out some of its existing communities. Gross margin as a percentage of home sales revenue for the third quarter was 25.6 percent, compared with 25.1 percent a year earlier, LGI said. The increase was due primarily to a higher average home sales price, which was offset by higher land and construction costs.Read More