In the second quarter, KB Home’s gross margins decreased by 30 basis points YoY (year-over-year) to 15.5%. On a sequential basis, they were down 50 basis points.
KB Home’s net income came in at $15.6 million on a GAAP (generally accepted accounting principles) basis, as compared to $9.6 million in 2Q15.
For 2Q16, KB Home reported revenues of $811 million, which easily topped the Wall Street estimate consensus of $750 million. Revenues increased by 30% YoY.
While Lennar’s CEO, Stuart Miller, recognizes that 1.2 million units could be the new normal, it’s important to note that 1.5 million starts was the normal pace from 1959 to 2002.
Lennar (LEN) is pulling back its land purchase plans and looking to exit new land purchases quickly. It calls this “shortening duration.”
On June 21, 2016, Lennar (LEN) reported 2Q16 net earnings of $218.5 million, or $0.95 per share, compared to its net income of $183 million, or $0.79 per share, in 2Q15.
In 2Q16, Lennar’s (LEN) gross margin rose 40 basis points sequentially to 23.1%. In 2Q15, the company’s gross margin was 23.8%.
In 2Q16, Lennar’s ASP (average selling price) rose 4% to $362,000 from $348,000 during the same period last year.
The June FOMC meeting came and went without a change in interest rates. There were concerns about weakening in the labor market and the Brexit.
This week, there are some important real estate data points with existing home sales, new home sales, and the FHFA House Price Index.
Foreclosure completions rose by 1,000 units to 37,000 in April 2016, according to CoreLogic. Completions fell 23% year-over-year. It’s a relatively high number.
Last week, the Labor Markets Conditions Index posted its fifth negative reading in a row. Productivity came in negative.
This week contains some important data with housing starts, industrial production, and retail sales. The FOMC meeting will be the highlight on June 14 and 15.
In May 2016, non-farm payrolls rose by 38,000, which missed Wall Street analysts’ estimate of 160,000 by a wide margin.
Aside from employment, the most important indicator of economic well-being is wages.
Planned job cuts fell 27% in May year-over-year. They fell 53% from April.
In April 2016, there were 5.8 million job openings, up 4% YoY (year-over-year).
The week after the jobs report doesn’t have much data. This week isn’t an exception. The next big event is the June FOMC meeting in just under two weeks.
A common theme from central bankers these days is that while they can stimulate more, they’re reaching the point of diminishing returns.
In April, housing starts rose to an annualized rate of 1.2 million from 1.1 million the month before. Building permits rose from 1.08 million to 1.13 million.