(Reuters) -Homebuilder Lennar (NYSE:LEN) on Thursday reported third-quarter profit above Wall Street targets as historically low home inventories in the market supported demand for new constructions while easing supply-chain snags helped improve delivery times.
Housing supply remains tight despite current mortgage rates hitting a two-decade high, as a majority of homeowners are locked into a fixed rate below 5%, making them unlikely to resell.
The "rate-lock in" effect has been a tailwind for homebuilders this year, even as rising home prices constrain affordability for many buyers.
"Market conditions remained constructive for new homebuilders during our third quarter," said Lennar co-CEO Stuart Miller, adding that tight housing supply, absorbed by strong current and pent-up demand, continued to help sales.
The second-largest U.S. homebuilder delivered 18,559 homes in the quarter ended Aug. 31, 8% higher than last year.
"Our cycle time during the quarter was down 32 days sequentially as the improving supply chain and labor market positively impacted our production times," said co-CEO Jon Jaffe.
Bolstered by higher deliveries, Lennar's profit margins saw sequential improvement to 24.4% from 22.5% last quarter.
However, the company, which tends to be conservative on pricing and aggressive on sales, said it expected flat average selling prices per home for the fourth quarter.
Lennar reported revenue of $8.72 billion in the third quarter, above analysts' estimates of $8.45 billion, according to LSEG data.
The Florida-based homebuilder's earnings of $3.87 per share came in above estimates of $3.51.