In this articleKBHLEN your favorite stocksCREATE FREE ACCOUNTwatch now2:0202:02What Jim Cramer thinks of Lennar's stock right nowMad Money with Jim CramerCNBC's Jim Cramer on Thursday reviewed recent earnings reports from major builders Lennar and KB , expressing concern that the Federal Reserve's rate cuts won't help bring down mortgage rates."I think it's better to take a wait-and-see apach to the builders, case we see a repeat of last fall, where the Fed started cutting and it didn't make a difference," he said.
"If anything, it drove the bond market in the wrong direction and mortgage rates higher."The Fed lowered its benchmark borrowing rate by 0.25% last week.
A cut from the Fed is usually expected to bring down bonds as Wall Street anticipates lowered borrowing rates across the board.
But in the wake of the Fed's cut, longer term yields, including mortgage rates, failed to decline.
In fact, the ten- and 30-Year Treasury yields — both of which influence mortgage rates — rose.Lennar disappointed investors when it reported soft quarterly earnings last week, Cramer said, noting that management said "even though mortgage rates began to trend downward towards the end of the quarter, stronger sales have not yet ed." The company also lowered earnings estimates for the current quarter and indicated that sales incentives managed to bring in more customers, but they hurt margins.
But Cramer pinpointed a few encouraging aspects of the quarter, including that Lennar cut construction costs and now has a leaner cost structure that it says will be an asset once rates come down and demand picks up.KB 's Wednesday report was a bit better than Lennar's, Cramer said, but not by much.
He noted that some key metrics came in better than expected, but the company cut its full-year forecast by a sizeable amount.
Management maintained that the longer-term outlook for the housing market is positive due in part to the housing shortage, Cramer noted.
But, Lennar, KB also said that changing mortgage rates haven't triggered an uptick in orders — and management suggested that "to some extent, buyers are in maybe a bit of a wait-and-see mode," potentially holding out for rates to come down further.Lennar and KB seemed optimistic that rates will start come down and will imve, Cramer added.
He suggested that lower rates are a necessity for the companies' success, but he stressed that as of now, long rates are still on the rise despite Fed action."Based on ary from Lennar and KB , the bulls ly got ahead of themselves here," he said.
"Because so far we haven't seen any meaningful increase in sales volume driven by lower mortgage rates."Lennar and KB did not immediately respond to request for .watch now7:2707:27Best to take wait-and-see apach to builder stocks, says Jim CramerMad Money with Jim CramerJim Cramer's Guide to Click here to download Jim Cramer's Guide to at no cost to help you build long-term wealth and invest smarter.
now for the CNBC to Jim Cramer's every move in the market.DisclaimerQuestions for Cramer? Call Cramer: 1-800-743-CNBCWant to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - InstagramQuestions, s, suggestions for the "Mad Money" website? madcap@cnbc.com