With the financial crisis spreading quickly, housing stocks have been facing tough times over the past few months. But on the heels of these worries, shares of one of the nation's largest homebuilders, Lennar Corp. (NYSE: LEN), have been climbing today despite posting a first quarter loss, as its earnings results were not as bad as analysts had forecast.The company announced it swung to a quarterly loss of $88.2 million, or 56 cents per share, compared with a profit of $68.6 million, or 43 cents per share a year earlier, hurt by lower new home deliveries and orders. Included in the company's earnings figures was a charge of 38 cents per share related to valuation adjustments and write-offs. Excluding that, Lennar's loss would have come at 18 cents per share, exceeding analysts' forecasts for a quarterly loss of $1.07 per share.
The company's quarterly revenue saw a huge fall of 62% to $1.06 billion, down from $2.79 billion a year ago, on pressure from the average selling price which lost 8%. For this period, the slumping housing market came with a drop of 60% for new home deliveries, and with a decline of 57% for new home orders.
With persistent fears over a possible recession, Lennar had to face a pretty difficult 2007. The tumbling housing market and credit crunch brought a slowdown in consumer spending, and the company believes this is far from over. As supply of homes will continues to exceed the demand, the company still has to face weak volume of new home sales and depressed prices.
Lennar's positive earnings gave investors' some hope amid the challenging market conditions, but the lack of home demand is still a major concern. Uncertainties around consumer spending could bring more substantial declines in orders and this is not something we can ignore.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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