Against a challenging and evolving market backdrop, Lennar reported strong quarterly and full-year fiscal results. The fourth quarter was characterized by interest rates rising near 8% before beginning to decline, which tested home buyer sentiment.

Despite the mortgage volatility, Stuart Miller, executive chairman and co-CEO of Lennar, said home purchasers remained responsive to incentives in the quarter that enabled better affordability.

“The well-documented production deficit and chronic supply shortage continued to result in housing demand outweighing short supply,” Miller said. “These conditions remained constructive for our overall operating strategy of focusing on production and sales pace over price, generating strong cash flow, increasing returns on equity and assets, and driving a strong bottom line.”

The strong quarter helped Lennar outperform analyst projections for the fourth consecutive quarter. The builder reported profits per share of $5.17, besting projections by more than $0.50 per share. The result is also $0.15 per share above Lennar’s fourth quarter 2022 results. For the full fiscal year, Lennar reported profits per share of $13.73.

The home builder reported total revenues of $11 billion in the fourth quarter and $34.2 billion for the fiscal year, compared with $10.2 billion and $33.7 billion in the fourth quarter of 2022 and 2022 fiscal year, respectively.

Lennar delivered 23,795 homes in the fiscal fourth quarter, a 19% year-over-year increase compared with the prior-year period. New orders increased 32% to 17,366, which Miller said was driven by the builder’s strategy “of maintaining production pace in lock step with sales pace” while using pricing and margin as shock absorbers. The builder started 18,378 homes in the fourth quarter, a 43% improvement compared with the prior-year period. Lennar’s average sales price, net of incentives, per home delivered was $441,000 in the fourth quarter, compared with almost $500,000 in the fourth quarter of 2022.

“We are clearly moving closer to an even flow operating model as we are now expecting approximately 18,500 starts, 18,000 new orders, and 17,000 deliveries in the first quarter of 2024,” Jon Jaffe, co-CEO and president of Lennar, said. “We expect more consistent results through the year as our cycle time is normalizing and was down 24% year over year as the improving supply chain and labor market positively impacted our production times and our inventory turn improved 1.5 times, reflecting broader efficiencies.”

Lennar ended the quarter with 14,892 homes in backlog valued at $6.6 billion compared with 18,869 homes valued at $8.7 billion at the end of the fourth quarter of 2022.

For the full fiscal year, new orders increased 13% to 69,111 homes, and home deliveries increased 10% to 73,087. For the full year, the average sales price decreased to $446,000 from $480,000.

“Even as the economic and interest rate environment has shifted from more restrictive to more constructive, we have remained vigilant and focused on a consistent even flow operating strategy,” Miller said. “This strategy has positioned us particularly well as interest rates now seem more likely to moderate in 2024.”

During the fourth quarter, Jaffe said Lennar continued the execution of its land-light strategy, evidenced by the builder’s supply of owned homesites improving to 1.4 years from 1.9 years. Lennar’s controlled homesite percentage increased to 76% from 69% year over year.