Headwinds and strategy
Against this backdrop, Lennar has been focusing on driving volume and growth, and matching the pace of production and sales. The company continues to offer various incentives to enable affordability and drive sales. Although the use of incentives have lowered margins, the sales and delivery of homes help to avoid the build-up of excess inventory.
LEN continues to build and deliver consistent volume by matching affordability with the needs of the market, and through this volume, it drives efficiencies across its platform. The company is also focusing on driving an asset-light, land-light balance sheet to effectively hold and develop land assets and build cash flow.
Lennar does not anticipate the current headwinds to abate in the near term. In such an environment, the homebuilder is working on improving its margins by lowering costs across its platform. The company believes that lower cost structures could help lower prices of homes and enable affordability. The benefit of this would reflect on the bottom line.
Q2 performance
In the second quarter of 2025, Lennar’s revenues decreased 5% year-over-year to $8.4 billion. Earnings, on an adjusted basis, declined 44% to $1.90 per share compared to the prior-year period. The company saw its revenues from home sales drop 7% in the quarter mainly due to a 9% decrease in average sales price. The decrease in sales price was the result of continued weakness in the housing market, and was partly offset by an increase in home deliveries.
In Q2, deliveries increased 2% to 20,131 homes and new orders increased 6% to 22,601 homes. Average sales price was $389,000. Gross margin on home sales dropped to 17.8% from 22.6% last year.
Outlook
For the third quarter of 2025, Lennar expects new orders and deliveries to range between 22,000-23,000 homes and average sales price to range between $380,000-385,000. Gross margin on home sales is expected to be approx. 18%.