(Bloomberg) -- Falling mortgage rates are giving a lift to U.S. homebuilders just in time for the key spring selling season.
Lennar Corp (NYSE:LEN). reported that orders jumped 24 percent to 10,463 in the quarter ended Feb. 28. The company said order growth exceeded the high end of its guidance by 5 percent. But deliveries fell short because of weather issues "across the country." KB Home (NYSE:KBH), which reported earnings after the market closed yesterday, had a slight drop in orders, which were still better than expected. Company executives said they plan to open 35 new communities in the second quarter.
Mortgage applications for home purchases jumped 4 percent from a year earlier, a sign that the spring season is off to a good start, according to data released today by the Mortgage Bankers Association.
“We continue to see choppiness," Lennar Executive Chairman Stuart Miller said in the earnings release. "However, during the quarter, mortgage interest rates subsided and ultimately pulled back and home prices moderated, providing a catalyst for the new home market to correct itself."
U.S. homebuilders have struggled since mortgage rates jumped last year, adding to an affordability crunch. Rates have since fallen, giving housing a boost. Both companies also cited slowing home price growth and a strong jobs market. KB Home also said it plans to offer more affordable options with smaller floor plans in some areas.
“Home prices have moderated recently and interest rates have come back down, improving affordability,” KB Home Chief Executive Officer Jeff Mezger said on a conference call after the first-quarter earnings report. “Last week’s announcement from the Federal Reserve signaling the likelihood of no further rate increases this year should also help to sustain the favorable macro environment.”