(Reuters) -Homebuilder Lennar Corp (NYSE:LEN) on Wednesday forecast a slowdown in new orders for the first quarter as high mortgage rates make properties unaffordable for some buyers.
The company's shares were down about 2% at $88.88 after the bell.
Lennar expects new orders in the current quarter to be between 12,000 and 13,500 homes, compared with new orders for 13,200 homes in the fourth quarter.
Over the past two years, high demand for homes from people working remotely due to the pandemic drove up prices across the United States, boosting profits for builders such as Lennar and D.R. Horton Inc.
However, the U.S. Federal Reserve's aggressive monetary policy tightening to curb decades-high inflation has made borrowing more difficult for customers as mortgage rates have more than doubled since the beginning of the year.
That has led to some buyers stepping away from the market, sending a chill through the sector and cooling prices. The S&P 500 Homebuilding index is down about 20% year to date.
Homebuilders have also been hit by worker and supply shortages that have driven up costs.
Sales of previously owned homes fell for an eighth straight month in September, while homebuilding dropped, signaling that higher mortgage rates are choking the housing market.
"As we have seen over the past quarters, interest rates are fluctuating and are likely to continue to move, and the housing market will continue to rebalance pricing and interest rates," Lennar Executive Chairman Stuart Miller said.
Last month, rival D.R. Horton warned home prices were set to decline next year.
Net income attributable to Lennar rose to $1.32 billion, or $4.55 per share, in the fourth quarter, from $1.19 billion, or $3.91 per share, a year earlier.
The company reported revenue of $10.17 billion, compared with estimates of $10.10 billion, according to Refinitiv IBES data.