Have Rising Mortgage Rates Hit This Developer?
Florida residential and commercial real estate developer St. Joe (NYSE: JOE) released a second-quarter earnings report that showed a 6% decrease in revenue and a 30% decline in net income. Shares tumbled after the report, but a deeper dive paints a rosier long-term picture for St. Joe.
While investors may fear rising mortgage rates will price some potential homebuyers out of the market, St. Joe is charging ahead. Though revenue from selling newly constructed homes fell by 32% to $28 million in the quarter, it wasn't because of slowing sales. The company actually sold 34% more units than in last year's second quarter.
Chief Executive Officer Jorge Gonzalez told investors that the slump in new-home revenue was due to supply chain constraints that delayed construction and delayed closings, when St. Joe collects revenue from sales, to the second half of 2022. He added that its residential backlog is growing because demand continues to outstrip supply.
Source Fool.com
