Posted on Monday, April 4, 2011
Lennar, one of the nation’s largest home builders, reported lower quarterly orders on Tuesday, signaling continued weakness in the housing market.
Shares fell 3.4 percent as the company said the important spring selling season, which began in early February, was not shaping up into a recovery from the five-year housing slump.
“The long-awaited spring selling season of 2011 has not yet defined itself as the beginning of a recovery cycle,” Stuart A. Miller, Lennar’s chief executive, said.
Lennar’s revenue fell 3 percent, to $558 million, while orders dropped 12 percent, to 2,267 homes. Orders are a leading indicator for home builders, which do not book revenue until they close on a house.
Industrywide, home prices fell for the sixth consecutive month in January, according to data released on Tuesday.
Lennar, which has operations in 14 states, including most of the East Coast, Texas and California, said it made a first-quarter profit of $27.4 million, or 14 cents a share, in contrast to a net loss of $6.5 million, or 4 cents a share, a year ago.
Earnings were helped by a legal settlement and other one-time gains.
Analysts on average expected a loss of 5 cents a share on revenue of $507.9 million, according to Thomson Reuters, but it was not clear if the numbers were comparable because of the many one-time items.
The company said its distressed land investment and development arm, Rialto, generated $11 million in operating earnings and called it a “bright spot.”
The company lost $25 million from home building.
As a result of the weak orders, Lennar will probably have to use more incentives — like upgraded features or cash gifts to buyers — to move homes it has built in anticipation of more demand, said Joel Locker, an analyst at FBN Securities.
“The housing market is still dismal,” he said.
In the first quarter, Lennar offered $33,100 in incentives per home, or 12.1 percent of home sales revenue, about flat with last year.