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Shares of homebuilder Lennar Corp. (NYSE: LEN) have been taking a beating today following weaker than expected earnings for its fiscal third quarter.Traders have pushed shares of the company down over 5% after the company reported that it had lost 97 cents per share for the period. This was a much wider loss than the 46 cents per share that analysts had been expecting to see from the Miami based company.
For the quarter, sales orders were down by 8% compared to the same period last year. The good news is that during each month of the quarter the company saw an increase in orders. As of the end of August, Lennar had the biggest back log of orders that the company has had in over a year, a sign that things could be starting to turn around for the ailing housing market.
Lennar did not give any sort of forward earnings guidance, but did issue a statement that if the economy continues to move at its recent pace that shareholders should expect to see the company return to profitability in fiscal 2010.
Year over year sales was down 29%, with the average home price dropping by 11% year over year for the company.
The bright side is the increased demand during the quarter allowing Lennar to reduce incentives that it was offering to new home buyers. In the fiscal second quarter, the company was offering $52,600 in incentives, but during its third quarter that figure dropped significantly down to $42,200. Still not great, but a nice improvement.
So what should we take from today's earnings report from Lennar. Firstly, it is obvious that homebuilders are still feeling the pain of the weak housing market, but the encouraging news is that things are looking better, and all homebuilders could be looking at better days on the horizon.
What are your thoughts on the housing market? Can we finally say that the worst is past us, or should we expect to numbers start to fall again now that government incentives are about to end? Let us hear what you think.
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Reader Comments (Page 1 of 1)
9-21-2009 @ 2:19PM
al coholic said...
FHA is now the vehicle of choice for home mortgage guarantees because a blemished credit rating doesn't weigh so heavily in the approval process and you can still get a mortgage with 3.5% down. How that is still possible is a mystery to me. Something like 70% of mortgages are FHA according to another blog I read recently here. Rolfe Winler, economist and blogger for Reuters posted the other day that FHA is about to need a bailout of it's own.
Based on what I see where I live and what seem to be abysmal housing sales even compared to numbers thirty years ago when there were 50 million fewer people, I don't think we need to putting on any victory grins just yet.