December 19, 2016 / 11:47 AM / 8 months ago

UPDATE 3-Lennar CEO sees "potential upside" in Trump administration

* Q4 profit, revenue top estimates

* Q4 orders rise 9 pct

* 2017 home sales to rise 7-9 pct

* Shares rise as much as 3.9 pct (Adds details from conference call)

By Arunima Banerjee

Dec 19 (Reuters) - Lennar Corp, the No. 2 U.S. homebuilder, reported a higher-than-expected quarterly profit and its CEO said he saw "potential upside" in Donald Trump's incoming administration.

The homebuilder, which mainly caters to buyers looking for a second home, also said the housing market would continue to make a "slow and steady recovery" next year.

An improving job market and attractive mortgage rates continue to fuel demand for housing in the United States, helping homebuilders such as Lennar and PulteGroup Inc.

U.S. home prices are set to rise almost 5 percent next year, despite the prospect of several interest rate increases, according to the latest Reuters poll.

The U.S. Federal Reserve raised interest rates last week and signaled a faster pace of increases in 2017 as policy makers adapt to the new administration.

President-elect Trump's promises of tax cuts, infrastructure spending and deregulation have raised expectations that the economy is set for stronger growth.

"As we look ahead to 2017, we expect to see a generally similar economic environment define the homebuilding landscape with some potential upside from the new administration in Washington," Chief Executive Stuart Miller said on a call with analysts.

Miller, however, added that the improvement in the market could be choppy and erratic as the new administration "goes through the throes of enacting an agenda of change."

Lennar, whose shares rose as much as 3.9 percent on Monday, is the first homebuilder to report since the Fed raised interest rates by a quarter of a percentage point last week.

Data in the past few months has pointed to strength in the housing industry. Permits for future construction of single-family homes - the biggest segment of the market - rose to a nine-year high in November, Commerce Department data showed on Friday.

D.R. Horton Inc, the biggest U.S. homebuilder, reported in November a 19.2 percent jump in fourth-quarter revenue, helped by higher home sales and prices, and said it expected its home sales for fiscal 2017 to rise 8-13 percent.

HIGHER HOME SALES

Lennar said orders - a key indicator of future revenue for homebuilders - rose 9 percent in the fourth quarter ended Nov. 30.

The company said in September it would buy fellow Florida-based homebuilder WCI Communities Inc for about $643 million, boosting its land bank in one of the fastest improving housing markets in the United States.

Excluding benefits from the WCI deal, Lennar said it expects to deliver between 28,500 and 29,000 homes for the year ending Nov. 30, 2017, compared with 26,563 homes in 2016.

The company expects an average sales price of $365,000-$370,000, up from $362,000.

Lennar sold 8,228 homes during the quarter, compared with 7,657 last year. The average sales price increased 2.6 percent to $358,000.

Lennar's net income attributable to shareholders rose to $313.5 million, or $1.34 per share, in the quarter from $281.6 million, or $1.21 per share, a year earlier.

Revenue rose 14.6 percent to $3.38 billion.

Analysts on average had expected the company to earn $1.29 per share on revenue of $3.30 billion, according to Thomson Reuters I/B/E/S.

Up to Friday's close, shares of the company had fallen 11.2 percent this year. (Reporting by Arunima Banerjee in Bengaluru; Editing by Anil D'Silva and Saumyadeb Chakrabarty)

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