Major homebuilder Lennar announced Thursday it anticipates delivering fewer homes in the upcoming quarter than Wall Street analysts had projected, as the struggling U.S. housing market continues to face headwinds. The company’s stock price dropped 3.2% in after-hours trading following the announcement.
Companies that build single-family homes like Lennar continue to face declining sales as several factors dampen buyer demand, including weak consumer confidence, employment concerns, and elevated mortgage rates.
To combat sluggish sales, builders have implemented targeted promotions including mortgage rate buydowns, but these strategies combined with ongoing inflation have cut into company profit margins.
During the second quarter, Lennar completed delivery of 20,519 homes, representing a 2% increase compared to the same period last year. However, the company’s average home price dropped approximately 5% to $371,000 per unit, reflecting ongoing market challenges and increased promotional incentives.
CEO Stuart Miller characterized the quarter as being “defined by the same stubborn headwinds that have challenged the housing market for the past several years – persistently elevated mortgage rates, constrained affordability, and cautious consumer sentiment.”
Miller noted that global political tensions have intensified these challenges and contributed to inflation rising to 4.2%, largely due to increased energy costs.
The Miami, Florida-based company projects it will deliver between 20,500 to 21,500 homes during the third quarter. Industry analysts had anticipated an average of 22,353 deliveries, based on data from LSEG.
When special items are excluded, Lennar reported second-quarter earnings of $1.31 per share, surpassing Wall Street projections of $1.24 per share.
However, company revenue for the quarter ending May 31 declined more than 5% to $7.94 billion, falling short of analyst expectations of $8.02 billion.
Lennar’s stock value has decreased by nearly half since reaching its peak in September 2024.
