Lennar misses estimates as housing headwinds persist

Investing.com -- Lennar Corporation (NYSE: LEN) reported second quarter earnings that fell short of Wall Street expectations as the homebuilder navigated persistent affordability challenges and elevated mortgage rates.

The company posted adjusted earnings per share of $1.31 for the quarter ended May 31, 2026, excluding mark-to-market losses on technology investments, while reported EPS came in at $1.24, missing the analyst estimate of $1.25. Revenue declined 2% YoY to $7.9 billion from $7.8 billion, falling short of the $8 billion consensus. Home deliveries increased 2% YoY to 20,519 homes, though the average sales price dropped 5% to $371,000 from $389,000 in the prior year period.

Shares fell around 1.5% in after-hours trading Thursday following the results.

Stuart Miller, Executive Chairman, CEO and President, said the quarter "was 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, exacerbated by geopolitical uncertainty creating a resurgent inflation reading of 4.2% driven by higher energy prices."

The company's gross margin on home sales declined to 15.6% from 17.8% in the year-ago quarter, primarily due to lower revenue per square foot and higher land costs, partially offset by construction cost improvements. New orders decreased 4% YoY to 21,749 homes, while the backlog stood at 16,818 homes valued at $6.6 billion.

For the third quarter of 2026, Lennar expects to deliver between 20,500 and 21,500 homes with an average sales price of $375,000 to $380,000. The midpoint of 21,000 deliveries aligns with market expectations. The company projects gross margin to improve to approximately 16% and SG&A expenses to decline to 8.8% to 9.0% of home sales.

Lennar reduced its full-year 2026 delivery target to approximately 82,000 to 83,000 homes, citing current pressure on interest rates and geopolitical uncertainty. The company repurchased 5 million shares for $447 million during the quarter and ended with $1.8 billion in homebuilding cash.

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