TLDR
- LEN Slides 3% After Q3 Earnings Plunge 46% on Margin and Pricing Pressure
- Lennar Q3 Earnings Slump 46% YoY; Orders Up but Incentives Squeeze Margins
- Lennar Stock Falls After Q3 Miss; Margins Drop Despite Higher Orders
- LEN Q3 Profit Sinks 46% as Home Prices Fall, Incentives Weigh on Margins
- Lennar Q3: Orders Rise 12%, But Earnings and Margins Take Big Hit
Lennar Corporation(LEN) shares closed at $132.87 but fell over 3% in after-hours trading, landing at $128.80. The decline followed the release of Q3 2025 results that showed a 46% year-over-year drop in earnings. Lennar attributed the fall to margin pressure and increased incentives to drive demand.
Net earnings dropped to $591 million, or $2.29 per diluted share, compared to $1.2 billion, or $4.26 per share, a year earlier. Excluding mark-to-market gains, LEN posted earnings of $2.00 per share, down from $3.90 per share in Q3 2024. Total revenue came in at $8.8 billion, compared to $9.3 billion last year, reflecting weaker pricing trends.
New home orders rose 12% to 23,004 homes, while deliveries remained stable at 21,584. However, the average home price fell to $383,000, down from $422,000 last year. This resulted from higher incentives, including mortgage rate buydowns to support buyer demand.
Margins Narrow as Incentives Weigh on Homebuilding Profits
Gross margin on home sales dropped to 17.5%, down from 22.5% in Q3 2024, due to pricing pressure and elevated land costs. LEN’s SG&A expenses increased to 8.2% of home sales, up from 6.7% last year, reducing operational efficiency. LEN’s homebuilding operating earnings fell to $760 million, down from $1.4 billion in the prior year.
LEN reported a net margin on home sales of 9.2%, impacted by higher marketing and sales efforts to maintain volume. Despite these pressures, LEN preserved stable deliveries year-over-year, showing strong execution under challenging market conditions. Controlled homesites remained high at 98%, indicating a continued focus on land strategy.
Homebuilding cash stood at $1.4 billion, while debt totaled $1.1 billion under the $3.1 billion revolving credit facility. LEN kept its homebuilding debt to total capital ratio at 13.5%, reflecting a disciplined capital structure. Share buybacks totaled $507 million for the quarter, with 4.1 million shares repurchased.
Efficiency Gains, Financial Services Growth Offer Some Support
LEN’s Financial Services segment reported operating earnings of $178 million, rising from $144 million last year due to more substantial loan margins. However, the Multifamily segment posted a $16 million loss, compared to $79 million in earnings in the prior year, which included one-time asset sales. The Lennar Other segment delivered $62 million in earnings, primarily from technology investment gains.
LEN improved its inventory turnover to 1.9 times and shortened its build cycle to a record 126 days. Executives highlighted operational gains and emphasized ongoing cost-cutting through digital and production-first strategies. Despite weak margins, these improvements position LEN to navigate market volatility better.
For Q4 2025, LEN expects new orders between 20,000 and 21,000 and deliveries of 22,000 to 23,000 homes, maintaining its gross margin at around 17.5%. While market conditions remain soft, LEN’s scale and strategy aim to sustain performance through operational leverage. The company continues to prioritize affordability and volume through targeted pricing and efficient execution.
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