Shares of Lennar Corporation (LEN) remained green on Friday. Stocks fell 15% since the start of the year. Home builders face a continuing weakening of the housing market, resulting in a decline in revenue and profits over the recent quarter. Against this challenging background, the company focuses on its strategy of matching production and sales and promoting affordable prices.
Headwinds and strategies
The housing market continues to face headwinds from a challenging macroeconomic environment as higher interest rates and inflation pressures continue to compare affordable prices with consumer confidence. A lack of supply of new homes due to underproduction has led to higher home prices and hindering affordability despite strong demand.
Against this background, Renard focuses on promoting volume and growth, consistent with the pace of production and sales. The company continues to provide various incentives to enable affordability and drive sales. Although the use of incentives has reduced margins, home sales and delivery can help avoid overstocking.
Wren continues to build and deliver consistent volumes by matching affordability with market needs, through which it drives efficiency across the platform. The company also focuses on promoting the asset light illumination balance sheet to effectively retain and develop land assets and build cash flows.
Renard does not expect the current headwinds to decline in the short term. In this environment, HomeBuilder is working to improve margins by reducing costs across the platform. The company believes that the low-cost structure can help lower home prices and may allow for affordable prices. The benefits of this are reflected in the final results.
Q2 Performance
In the second quarter of 2025, Lennar revenue fell 5% year-on-year to $8.4 billion. Revenues fell 44% from the same period last year to $1.90 per share on an adjusted basis. The company fell 7% in revenue from home sales in the quarter, primarily as average selling prices fell 9%. The decline in sales prices was a result of a continuing weakening of the housing market, partially offset by an increase in home delivery.
In the second quarter, delivery rose 2% to 20,131 homes, while new orders rose 6% to 22,601 homes. The average selling price was $389,000. Total home sales margins fell to 17.8% from 22.6% last year.
Outlook
In the third quarter of 2025, Lennar expects new orders and delivery to be in the range of 22,000-23,000 units, with average selling prices in the range of $380,000-$385,000. The gross profit for home sales is expected to be approximately. 18%.
