Lennar (LEN  ) stock was more than 10% higher following the company's Q2 earnings report which showed it beating analysts' expectations on the top and bottom lines. The company did note that housing demand had significantly slowed in many locales as a result of higher mortgage rates.

Mortgage rates in an absolute sense at 6% aren't necessarily bearish, however, it's been a shock to buyers to see rates doubling in 6 months, resulting in monthly payments rising by 40 to 70% in many instances. This has been the major factor behind the slowdown in housing, and it seems that there's a buyer's strike in hopes that rates will come back down.

One positive from the report was that supply chain issues have materially improved, in part due to less demand, leading to an unexpected increase in gross margins. This could also be interpreted as a disinflationary force that could be a positive for stocks if this trend continues.

Inside the Numbers

In Q2, Lennar reported adjusted earnings of $4.69 per share, beating expectations of $3.95 per share. It was also a 59% increase from last year's Q2. Revenues were up 30% and beat expectations at $8.4 billion vs $8.1 billion.

Home deliveries increased by 14%, and gross margins were 29.5% vs 26.1% in last year's Q2. The Financial Services segment saw a 14% drop in revenue as a result of lower financing with higher rates.

New orders and deliveries also were better than what analysts were expecting. The company also continues to aggressively buy back shares as it spent $320 million in Q2 at an average price of $78.20.

During the second quarter, the company repurchased 4.1 million shares of its common stock for $320.6 million, at an average cost of $78.20 per share which equates to about 1.6% of its total market cap.

Lennar's outlook was strong across the board. In Q3, it sees between 17,000 and 18,500 home deliveries and gross margins between 28.5% and 29.5%. For the full year, it expects to deliver 68,000 homes.