CNBC’s Jim Cramer on Monday reviewed recent results from two major homebuilding companies, Lennar And Knowledge Base Homesaying he was satisfied with the sector as a whole, even though Wall Street favored the latter last week.
“Even though Lennar fell and KB Home rose after last week’s two reports, I’m pretty positive on both stories, and on homebuilders in general,” Cramer said. “While this should theoretically be a difficult situation if rates remain high for longer, the housing shortage has not gone away anywhere.”
Wall Street doesn’t seem to know how to treat these stocks, Cramer said, as they started the year strong as investors thought several rate cuts were on the horizon. But the group has stalled as the Federal Reserve continues to keep interest rates steady.
Lennar and KB Home managed to beat Wall Street’s expectations, but Cramer said investors were concerned about Lennar’s mixed guidance and that management had cited “increased sales incentives.” He said some might also be wary of Lennar’s proposed spinoff because it could indicate the company is less optimistic about housing demand.
At the same time, KB Home raised its annual outlook for real estate revenue, and Cramer noted that the company had not spent much time discussing the need for sales incentives to boost revenue. activity.
Cramer said he liked KB Home and felt “more bullish” about Lennar than Wall Street, adding that the two companies used two different strategies. Cramer said KB Home is “more interested in maintaining prices than increasing deliveries” – in other words, the company is less concerned about excess inventory. But Lennar is more focused on preventing excess inventory, Cramer said, and noted that the company is seeing a significant increase in deliveries and orders.
“If we get any relief on the interest rate front, Lennar’s results suggest it could attract a new wave of buyers, which is why I think this housing bull market is far from over. be finished,” he said.
Lennar and KB Home did not immediately respond to requests for comment.
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