Investing.com -- Lennar Corporation (NYSE: LEN) shares fell 3.7% in after-hours trading Tuesday after the homebuilder reported fourth-quarter earnings that missed analyst expectations, despite delivering better-than-expected revenue amid challenging market conditions.

The nation’s second-largest homebuilder reported adjusted earnings per share of $2.03 for the fourth quarter, falling short of the $2.21 analyst consensus. Revenue came in at $9.4 billion, exceeding the $9.01 billion analysts had expected. The company delivered 23,034 homes during the quarter, a 4% increase YoY, while new orders rose 18% to 20,018 homes. However, the average sales price declined 10% YoY to $386,000, reflecting increased use of incentives to attract buyers in a market constrained by affordability challenges.

Gross margin on home sales contracted significantly to 17.0% from 22.1% in the year-ago quarter, primarily due to lower revenue per square foot, higher land costs, and continued incentives averaging approximately 14%.

"Even as interest rates moved slightly lower in our fourth quarter, the overall market remained challenged," said Stuart Miller, Executive Chairman and Co-Chief Executive Officer. "Despite the added pressure of a six-week government shutdown, we continued to build and sell homes, adapting as needed to changing market conditions."

For the first quarter of fiscal 2026, Lennar expects to deliver between 17,000 and 18,000 homes with an average sales price between $365,000 and $375,000. The company anticipates gross margins of 15% to 16%, lower than the fourth quarter due to typical seasonal patterns and market conditions.

For the full fiscal year 2025, Lennar delivered 82,583 homes, a 3% increase from the previous year, with total revenue of $34.2 billion.

"Although the current market presents short-term challenges, we are highly confident that our strong market position and disciplined operating strategy will set us up for long-term success," Miller added.