Lennar Profit Soars

By DAWN WOTAPKA

Lennar Corp.'s fiscal second-quarter profit soared from a year earlier, boosted by a pickup in home sales and a tax-related gain.

The strong results from one of the nation's largest builders are the latest evidence that the hard-hit housing sector is healing. May's pending home sales, which are based on signed contracts, matched the highest level in two years, the National Association of Realtors said Wednesday.

Now Reporting

Track the performances of 150 companies as they report and compare their results with analysts' estimates. Sort by date and industry.

• More photos and interactive graphics

This follows the closely watched S&P/Case-Shiller home-price index, released Tuesday, that showed home prices in the largest metropolitan areas rose again in April.

"Evidence from the field suggests that the 'for sale' housing market has, in fact, bottomed and that we have commenced a slow and steady recovery process," Lennar Chief Executive Stuart Miller said in the premarket release. "Although highly conservative mortgage-lending practices and challenging appraisals remain a constant headwind, we are experiencing net positive price and volume trends in most of our markets."

The results, which provide a glimpse into the end of the spring selling season, boosted Lennar's shares by nearly 5.7% to $28.95. Other builders also saw gains: KB Home, which is expected to report quarterly results Friday, climbed 3.2% to $8.63, while PulteGroup Inc. added 4% to $10.09.

For the quarter ended May 31, Miami-based Lennar reported a profit of $452.7 million, or $2.06 a share, up from year-earlier earnings of $13.8 million, or seven cents a share. The most-recent quarter included $1.85 a share from a partial reversal of a deferred-tax asset valuation allowance. Excluding the tax-related gain, per-share earnings were 21 cents.

Revenue climbed 22% to $930.2 million as revenue from homebuilding also rose 22% to $808.1 million.

Analysts surveyed by Thomson Reuters recently expected a per-share profit of 17 cents on revenue of $886 million.

Gross margin on home sales widened to 22.5% from 19.4%, one of the sector's highest rates.

Deliveries rose 20% to 3,222 homes. New orders grew 40%, while the cancellation rate was 16%.

Write to Victoria Stilwell at victoria.stilwell@wsj.com

Industry-watchers were largely positive on the builder's performance.

"The company remains our top fundamental pick in the homebuilder space. Lennar's quarterly performance was impressive and provides further evidence that the U.S. housing market is, in fact, in recovery mode," wrote Vincent Foley, a builder analyst with Barclays Capital, in a client note.

Lennar is in talks with the China Development Bank for about $1.7 billion in capital to jump-start two San Francisco housing projects that have long been delayed, according to The Wall Street Journal, which cited people familiar with the discussions.

—Victoria Stilwell contributed to this article