(Reuters) – D.R. Horton beat Wall Street estimates for first-quarter revenue and profit on Tuesday as a persistent shortage of existing homes in the U.S. housing market helped boost new home sales despite higher mortgage rates.

Shares of the construction company rose more than 5% in premarket trade.

Homebuilders are benefiting from a shortage of existing homes on sale, partly due to current homeowners, who secured properties when interest rates were low, being reluctant to sell and purchase new homes in today’s higher mortgage rate climate.

The limited supply of resale homes, which make up a significant portion of U.S. housing sales, has pushed up demand for newly built homes despite the high borrowing costs and rising prices.

“Despite continued affordability challenges and competitive market conditions, incentives such as mortgage rate buydowns have helped to address affordability and spur demand,” D.R. Horton executive chairman David Auld said, adding that the company has started to sell more of its homes with smaller floor plans to meet homebuyer demand.

D.R. Horton, the largest U.S. homebuilder by sales, closed sales on 19,059 homes in the first quarter ended December 31, down 1% from 19,340 homes a year earlier.

Pre-tax profit margin in its homebuilding segment came in at 14.1% for the quarter, compared with 15% a year earlier.

The Arlington, Texas-based company posted first-quarter revenue of $7.61 billion, above analysts’ average estimate of $7.08 billion, according to data compiled by LSEG.

Earnings of $2.61 per share for the quarter also came in above analysts’ estimates of $2.36 per share.