Lennar Corporation (NYSE:LEN) reported third-quarter results that missed analyst expectations as the housing market continued to challenge the homebuilder.
The company posted adjusted earnings per share of $2.00, below the projected $2.10, while revenue totaled $8.8 billion, slightly under the consensus estimate of $8.97 billion.
Shares of Lennar slid about 3% in premarket trading Friday.
The builder delivered 21,584 homes during the quarter, nearly unchanged from 21,516 in the same period last year. However, revenue from home sales fell 9% year-over-year to $8.2 billion, largely due to a 9% decline in the average sales price of homes, which dropped to $383,000 from $422,000 a year earlier.
“Our third quarter results reflect both the continued pressures of today’s housing market and the consistency of Lennar’s operating strategy,” said Stuart Miller, Executive Chairman and Co-CEO of Lennar. “Achieving these results required additional incentives, resulting in a reduced average sales price of $383,000, and our gross margin drifted down to 17.5%.”
Gross margin on home sales declined to 17.5% from 22.5% in the prior-year quarter, while SG&A expenses as a percentage of home sales increased to 8.2% from 6.7% a year ago.
Despite the headwinds, new orders rose 12% to 23,004 homes, signaling some underlying demand. The company ended the quarter with a backlog of 16,953 homes valued at $6.6 billion.
For the fourth quarter, Lennar expects to deliver between 22,000 and 23,000 homes at an average sales price of $380,000 to $390,000, with gross margins projected to remain near 17.5%, consistent with Q3.
“Management noted that they intend to slow production to allow the market to catch up amidst the lower mortgage rate environment, which is music to investors’ ears,” said Evercore ISI analysts. “However, while this combination of factors should be supportive to profitability, management nevertheless guided 4Q25 margins merely flat with 3Q25’s 17.5%,” they added.
Separately, TD Cowen analysts said they expected a negative share price reaction “given our view that Street EPS estimates for FY25/FY26 likely need to be revised lower.”
During the quarter, Lennar repurchased 4.1 million shares of its common stock for $507 million, at an average price of $122.97 per share.
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