Homebuilder NVR's profit misses on muted demand for new homes

NVR

23/07/2024 15:07

July 23 (Reuters) - NVR  NVR.N  missed Wall Street
estimates for second-quarter profit on Tuesday as high mortgage
rates have kept demand for new homes subdued, sending the
homebuilder's shares down 2.2%.
    With the popular 30-year fixed mortgage rate at around 7%,
many prospective homebuyers have been pushed to the sidelines of
the U.S. housing market, especially as base home prices also
remain elevated due to a supply shortage.
    Virginia-based NVR reported revenue of $2.61 billion for the
quarter, beating analysts' estimates of $2.51 billion, according
to LSEG data.
    Persistent affordability issues have prompted homebuilders
to offer incentives on home sales to whip up demand, even at the
expense of profit margins.
    One of the popular incentives offered by homebuilders is a
mortgage rate buydown, which functions as a temporary or
permanent reduction on a home loan.
    NVR said its second-quarter gross profit margin fell to
23.6% from 24.3%.
    The company reported new orders of 6,067 homes in the
quarter, up 3%, with the average selling price per home up 3% at
$458,800.
    Net income attributable to NVR was $120.69 per share.
Analysts had expected $121.21 per share.

 (Reporting by Ananta Agarwal and Anandita Mehrotra in
Bengaluru; Editing by Shailesh Kuber and Shounak Dasgupta)
 ((ananta.agarwal@thomsonreuters.com))