Finance News
Lennar describes affordability as ‘stretched’ amidst emerging issues in the US housing market.
Lennar describes affordability as being stretched as signs of weakness in the US housing market emerge,
On Thursday, Lennar’s CEO Stuart Miller expressed concern about the affordability of homes as mortgage rates are hovering around 7%. He mentioned that affordability is stretched for homebuyers, with more customers showing higher credit card and personal debt in their applications, leading to an increase in delinquencies. Lennar reported revenue that missed analyst estimates for the first quarter, causing its stock to drop by 6% and impacting D.R. Horton and Toll Brothers as well.
US household debt and delinquency rates have been on the rise, reaching $17.5 trillion in the fourth quarter of 2023 according to the Federal Reserve Bank of New York. The challenges of higher mortgage rates and home prices have been hindering buyers from entering the market, with mortgage rates peaking at around 7% in mid-February but have since slightly decreased.
Despite these challenges, Lennar Financial Services CEO Bruce Gross noted on the earnings call that customers are accumulating more debt relative to their total income. Investors are anticipating a potential interest rate cut from the Federal Reserve, although the central bank has emphasized caution and the timeline for any rate adjustments remains uncertain.
Builders have resorted to offering incentives such as mortgage rate buydowns and price reductions due to the high rates. Lennar reduced its average sales price by 8% to $413,000 in the recent quarter, leading to lower revenues than expected. However, Lennar remains optimistic about strong homebuyer demand fueled by a chronic inventory shortage.
New orders for Lennar saw a 28% increase in the quarter, exceeding the company’s estimates. The builder plans to close 80,000 homes for the year. For more detailed financial news and analysis, check out the latest updates on Yahoo Finance.
FAQ:
1. What is the impact of high mortgage rates on homebuyers?
High mortgage rates have made it challenging for buyers to afford homes, leading to more debt accumulation and delinquencies.
2. How are builders coping with the affordability issue?
Builders are offering incentives such as mortgage rate buydowns and price reductions to make homes more accessible to buyers.
3. What is the outlook for interest rates from the Federal Reserve?
While investors expect a potential interest rate cut, the Federal Reserve has signaled a cautious approach, with the timing of any rate adjustments remaining unclear.
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Hooters CEO Sal Melilli joins ‘Fox & Friends’ to discuss plans to return the brand to its roots as a ‘neighborhood restaurant.’
Italian restaurant chain Bertucci’s is closing more locations after filing for bankruptcy again to mitigate losses.
The Massachusetts-based business, which has locations along the East Coast and is best known for its brick oven pizza and pasta, filed for Chapter 11 bankruptcy protection in Florida last week. It marked the chain’s third bankruptcy since 2018.
Bertucci’s also closed seven of its underperforming locations – five in Massachusetts, one in Rhode Island and one in Maryland. It now operates 15 restaurant locations in six states, according to court documents.
RESTAURANT CHAIN BERTUCCI’S FILES FOR BANKRUPTCY PROTECTION
Italian restaurant chain Bertucci’s has filed for bankruptcy for the third time since 2018. It has also closed seven restaurants to mitigate losses, according to an April 24 bankruptcy filing. (WFXT)
The company cited the “deterioration” of the U.S. economy and “lack of consumer demand for legacy casual-dining brands” as reasons why the restaurant chain has been operating at a loss, according to the filing.
FAST-FOOD CHAIN CLOSING UP TO 200 ‘UNDERPERFORMING’ LOCATIONS
“With losses accumulating, inflationary pressures still high, and industry headwinds gusting, the proverbial final straw fell on [Bertucci’s] this year as the world saw food costs soar, consumer spending slow, and an uncertain global economy falling in (and out) of decline,” as stated in the bankruptcy documents.
Bertucci’s has assets and liabilities between $10 million and $50 million, according to the filing.
TGI FRIDAYS’ US FOOTPRINT HAS SHRUNK TO 85 RESTAURANTS ACROSS THE COUNTRY
The restaurant chain hopes bankruptcy will provide the business with a “breathing spell” so it can “determine the best path forward and formulate an overall reorganizational plan,” it said in the filing.
In April 2018, Bertucci’s filed for Chapter 11 bankruptcy protection and closed 15 restaurants. In December 2022, amid challenges caused by the COVID-19 pandemic like the closure of restaurants and inflation, it declared bankruptcy for a second time and streamlined operations down to 23 locations, according to the filing.
Bertucci’s previously filed for bankruptcy in 2018 and 2022. (WFXT)
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Bertucci’s did not respond to FOX Business’ request for comment.
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