Homebuilder Lennar Corp. (LEN,LEN.B) Thursday reported a wider net loss for the second quarter, as it witnessed a 23% decline in home sales that reflected lower new home deliveries and a drop in average selling prices. The Miami, Florida-based company stated it is difficult to predict when the market would recover and said it continues to focus on returning to profitability.
Lennar was the second largest homebuilder in the U.S. in 2008, constructing homes in 17 different states. The company's commercial operations are handled by its spinoff LNR Property Corp. (LNR).
The company's net loss for the quarter was $125.19 million or $0.76 per share, wider than a net loss of $120.92 million or $0.76 per share reported in the year-ago quarter. The per-share results included a charge of $0.38 related to valuation adjustments and other write-offs, and a charge of $0.27 related to a non-cash deferred tax asset valuation allowance.
Analysts polled by Thomson Reuters expected the company to report a loss of $0.64 per share for the quarter. Analysts' estimates typically exclude special items.
Total quarterly revenues were $891.85 million, down from $1.13 billion a year ago. Analysts had consensus revenue estimate of $597.49 million for the quarter.
Total homebuilding revenues plunged to $805.23 million in the second quarter from $1.05 billion a year ago. Home sales decreased 23% to $788.6 million from $1.02 billion in 2008. The company attributed lower home sales to a 16% decrease in the number of home deliveries, excluding unconsolidated entities, and an 8% decrease in the average sales price of homes delivered in 2009.
New home deliveries, excluding unconsolidated entities, decreased to 3,138 homes from 3,729 homes last year. Average sales price dropped to $251,000 from $274,000 in the same period last year, primarily due to reduced pricing. Sales incentives offered to homebuyers were $52,600 per home, compared with $48,700 per home delivered last year.
The company's Financial Services segment generated quarterly revenues of $86.62 million, up from $81.37 million in the previous-year quarter. Operating earnings were $16.5 million, compared with an operating loss of $3 million in the same quarter last year. Improved consumer confidence and lower interest rates resulted in increased volume and a higher profit per transaction in the segment.
Commenting on the results, Stuart Miller, President and Chief Executive Officer of Lennar, said, "During the second quarter, the housing market experienced an uptick in sales of new homes, compared to the first quarter, as more confident homebuyers took advantage of increased affordability."
"Declining home prices, historically low interest rates and government stimulus programs, such as the $8,000 federal tax credit and the $10,000 California state tax credit, created unique purchasing opportunities and made it more compelling for homebuyers to enter the market," Miller added.
For the six-month period, Lennar posted a net loss of $281.11 million, or $1.74 per share, compared with a loss of $209.13 million, or $1.32 per share, a year ago. Total revenues slid to $1.48 billion from $2.19 billion in the previous year. The company also reported a 33% drop in revenues from home sales to $1.3 billion from $2.0 billion in the same period last year.
Lennar was drastically hit by the crisis in the U.S. housing market in 2007 and 2008. According to the company, 32% of people who signed contracts for new homes backed out of them. The housing slump also appears to be causing delays on one of the company's largest project, the Orange County Great Park, due to slower home sales.
For the sequentially preceding first quarter, Lennar reported a wider net loss, hurt by lower home deliveries combined with a fall in average sale price due to low consumer confidence, increased unemployment and growing foreclosures. The company's net loss for the first quarter was $155.9 million, compared with a loss of $88.2 million last year. Loss per share widened to $0.98 from $0.56 per share a year ago. The company also reported a 44% slide in revenues to $593.06 million from $1.06 billion in the prior-year quarter. First-quarter revenue from home sales slid 45% as number of home deliveries fell 38% and average sales price decreased 12%. Number of homes delivered was 40% lower in the first quarter to 2,142. New orders were down 8%.
According to the Commerce Department, new U.S. home sales have dropped 0.6% in May from April to a seasonally adjusted annual rate of 342,000. Meanwhile, the number of new homes for sale at May-end declined over 2% from April to 292,000, showing some sales traction during the spring season.
Among others in the sector, Centex Corp. (CTX) on May 5 reported narrower net loss for the fourth quarter, helped mainly by narrower operating losses in the home building segment. The Dallas, Texas -based Centex's net loss for the quarter was $402.7 million or $3.24 per share, compared with $910.5 million or $7.36 per share a year earlier. Revenues plunged 54% to $823.21 million from $2.31 billion last year.
On May 4, D.R. Horton, Inc. (DHI), the largest U.S. homebuilder, posted narrower second-quarter loss, mainly due to lower inventory impairments and land option cost write-offs. However, the company's quarterly loss per share came in worse than analysts predicted.
The Fort Worth, Texas-based D.R. Horton's net loss was $108.6 million or $0.34 per share, compared with $1.3 billion or $4.14 per share for the year-ago quarter. This marks the eighth consecutive quarterly loss for D.R. Horton. Homebuilding revenue fell 52% to $775.3 million from $1.62 billion last year.
According to Donald Horton, Chairman of D.R. Horton's Board, the company saw a seasonal increase in sales activity in the March quarter. However, market conditions in the homebuilding industry are still challenging, characterized by rising foreclosures, high inventory levels of new and existing homes, increasing unemployment, tight credit for homebuyers and eroding consumer confidence.
Looking ahead, Lennar's Miller noted, "While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry to generate sales at a more robust pace and at stabilized pricing. This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner."
Recently, S&P has maintained its hold rating on Lennar's stock. S&P said that sales have been negatively impacted by contract cancellations and reduced orders, thereby lowering its backlog contract value. LEN closed Wednesday's trading at $7.82, up $0.34, on a volume of 8.42 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.