Lennar flags home demand cooldown

(Disclosure: Rose Law Group represents Lennar.)

By Nathan Gomes and Abhijith Ganapavaram | Reuters

June 21 (Reuters) – U.S. homebuilder Lennar Corp (LEN.N) on Tuesday warned of a downturn in home demand as red-hot prices and surging interest rates push buyers to the sidelines, threatening the industry’s breakneck pace of profit growth.

In the sector’s strongest warning so far, Lennar said any forecast at this point would amount to “guessing”, even though the company preserved its delivery expectations for the full year at about 68,000 homes.

“The Fed’s stated determination to curtail inflation through interest rate increases and quantitative tightening have begun to have the desired effect of slowing sales in some markets and stalling price increases across the country,” Lennar Executive Chairman Stuart Miller said in a statement.

Last week, the U.S. Federal Reserve delivered its biggest interest rate hike since 1994 in a bid to tackle decades-high inflation, while mortgage rates on the most popular type of U.S. home loan marked the sharpest weekly jump in 35 years.

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