One of the largest homebuilders said it can't give a forecast because the market is so 'uncertain'
- Lennar reported strong fourth-quarter earnings on Wednesday, but deferred guidance for 2019 "until the markets further define themselves."
- "We continued to experience slower sales due to higher home prices and rising mortgage rates," Lennar's executive chairman said.
- The homebuilder also noted "buyer expectations" were still too high.
The U.S. housing market has become so cloudy that Lennar says it can't give investors guidance for 2019.
The second biggest homebuilder in the country by market value, second only to D.R. Horton, reported strong fourth-quarter earnings on Wednesday, but the company could only scratch its head when it comes to the future.
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"Due to continued softness and uncertainty at this seasonally slower time of year, we are deferring guidance for fiscal year 2019 until the markets further define themselves," Lennar's executive chairman Stuart Miller said in a press release.
While earnings doubled in the fourth quarter, the homebuilder has already felt the pressure from a slowdown in the housing market as the higher mortgage rates continue to weigh on buyer confidence. Home values in November 2018 were 5.1 percent higher compared with November 2017.
"We continued to experience slower sales due to higher home prices and rising mortgage rates. We continue to believe that the housing market is adjusting to a temporary disconnect between sales prices and buyer expectations and that the basic underlying fundamentals of low unemployment, higher wages and low inventory levels remain favorable," Miller said in the release.
Lennar reported net earnings of $796.1 million in the fourth quarter, compared to $309.6 million in the prior year. Shares of Lennar jumped more than 7 percent on Wednesday.
Some clarity for Lennar could be coming: New data out Wednesday showed mortgage applications jumped last week as prospective buyers were encouraged by a pullback in rates.
"As rates have started to ease, we have seen traffic pickup," Miller said in an earnings call on Wednesday. "Therefore we continue to believe the market has taken a natural pause. It will adjust and re-calibrate and demand driven by fundamental economic strength will resume."