Home builder Lennar is seeking to sell Rialto Capital, the company's real estate lending company, per The Wall Street Journal. Lennar has not yet issued a public comment on the reporting.
In a recent investor call, Lennar confirmed that it was selling Rialto as part of its overarching strategy to sell or spin off its subsidiaries, potentially to reinvest in its home building business, The National Association of Realtors reports. As well, the rate for a 30-year fixed-rate mortgages recently hit five percent, putting pressure on home loan borrowers, who may now be priced out of buying Lennar's new-home inventory. Lennar's average home price is about $400,000.
It was just last year when Lennar became the nation’s largest homebuilder by revenue after it acquired rival CalAtlantic Group. But since then, the market has softened. Builders have “had a tough time opening new communities because land has gotten pretty expensive,” says John Burns, a real estate consultant. They industry also blames labor shortages, tax laws, and rising lumber and land prices for slowdowns. Lennar and other builders have reported solid earnings in the most recent quarter, but the slowing housing market may also be weighing on investor sentiment.