Key facts
- Lennar's third-quarter home delivery forecast of 20,500-21,500 units falls short of analyst expectations of 22,353.
- The company cited persistently high mortgage rates, constrained affordability, and cautious consumer sentiment as key challenges.
- Second-quarter deliveries increased 2% year-over-year to 20,519 units.
- The average selling price in the second quarter decreased by approximately 5% to $371,000.
- Second-quarter profit per share was $1.31, beating estimates, but revenue of $7.94 billion missed expectations.
Lennar forecast third-quarter home deliveries below Wall Street estimates on Thursday, signaling continued weakness in the U.S. housing market. The company's shares fell 3.2% in after-hours trading following the announcement.
Single-family homebuilders like Lennar are contending with slowing sales due to factors including weak consumer confidence, job uncertainty, and elevated mortgage rates. These challenges, combined with persistent inflation, have led to increased use of incentives like mortgage rate buydowns, which have eroded profit margins.
In its second quarter, Lennar delivered 20,519 homes, a 2% increase from the previous year. However, the average selling price dropped about 5% to $371,000 per unit, reflecting market softness and higher incentives.
CEO Stuart Miller stated that the quarter was defined by "persistently elevated mortgage rates, constrained affordability, and cautious consumer sentiment." He also noted that geopolitical uncertainty contributed to resurgent inflation, driven by higher energy prices.
For the third quarter, Lennar expects to deliver between 20,500 and 21,500 homes. Analysts, on average, had anticipated 22,353 deliveries. The company's second-quarter adjusted profit was $1.31 per share, surpassing expectations of $1.24, but revenue of $7.94 billion missed estimates of $8.02 billion.