Lennar Corporation (LEN), one of the largest homebuilders in the U.S., reported a 5.2% year-over-year decline in revenue to $7.9 billion for the second quarter, delivering 20,519 homes, which fell short of the $8 billion consensus estimate. The company’s net margin decreased to 4.93%, while its gross margin improved slightly to 15.6%. Lennar has revised its full-year delivery guidance to 82,000–83,000 homes, citing pressures from high interest rates and macroeconomic uncertainties.
As mortgage rates rise, the housing market faces a significant affordability crisis. New orders for Lennar grew just 1% year over year in the first quarter, indicating a growing difficulty for buyers to enter the market. Shares of Lennar currently trade around $78, approximately 44% below their 52-week high, and analysts have begun cutting targets, with JPMorgan setting a price target of $77.
Looking ahead, Lennar expects losses of around $15 million across several segments and has guided earnings of $1.20 to $1.40 per share for the upcoming quarter. The company’s future earnings estimates have dropped, suggesting ongoing challenges in the housing sector amidst rising interest rates.
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