US existing home sales for May are due at the top of the hour and expected at a 5.40m run rate, down from 5.61m previously.
Today, US home builder Lennar reported resents, beating expectations. The focus is on forward-looking metrics though and the company had this to say:
"While our second quarter results demonstrate strength and excellent performance throughout the quarter, the weight of a rapid doubling of interest rates over six months, together with accelerated price appreciation, began to drive buyers in many markets to pause and reconsider. We began to see these effects after quarter end."
"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. While we believe that there remains a significant shortage of dwellings, and especially workforce housing, in the United States, the relationship between price and interest rates is going through a rebalance."
"Accordingly, we are laser focused on traffic, affordability, the quality of our backlog, along with cancellation rates and completed, unsold inventory levels which, to date, are both at low levels. Additionally, we are focused on balance sheet strength as we ended the quarter with $1.3 billion in cash, no borrowings on our $2.6 billion revolver and homebuilding debt to capital of 17.7%. Our balance sheet has never been in a stronger position than it is today."
The company left its guidance for 68,000 homes unchanged and guided for 28.5-29.5% gross margins in Q3.
