Exceeding the most pessimistic estimates from analysts and indicating the worst housing market in 16 years, the company’s third-quarter net loss was $513.9 million, or $3.25 a share. Revenue at Lennar fell 44 percent to $2.34 billion, the lowest in more than three years.
The company will cut jobs, according to Chief Executive Officer Stuart Miller, “to bring us back to profitability.” Lennar has reduced its workforce by about 35 percent as sales have fallen for four consecutive quarters.
“Heavy discounting by builders, and now the existing home market as well, has continued to drive pricing downward,'' Miller said in the statement. “Consumer confidence in housing has remained low, while the mortgage market has continued to redefine itself, creating higher cancellation rates.''
Sales of new homes dropped 10.2 percent in July from a year earlier, according to the Commerce Department, as buyers were thwarted by stricter mortgage lending. Home prices in 20 U.S. metropolitan areas fell the most on record in July, according to an S&P/Case-Shiller survey. Values dropped 3.9 percent in the 12 months through July.
“It's just a scenario where there's too much supply right now relative to the demand so pricing is suffering,'' said Peter Schofield, who helps manage about $1 billion at Exton, Pennsylvania-based Knott Capital. “The builders are doing everything they can to try to create incentives for buyers, but the lending standards, having gotten so much tougher, present a quandary.''
The per-share loss at Lennar included a charge of $3.33 to write off land option deposits and to reduce the value of the company's assets. Lennar sold most of its homes in Houston and Austin, Texas; Riverside-San Bernardino, California; and Tampa, Florida, according to UBS Investment Research.
Lennar was projected to report a fiscal third-quarter loss of about 58 cents a share, excluding some items, according to the average estimate of 11 analysts surveyed by Bloomberg. The lowest estimate from analysts was for a loss of $1.21 a share.
Lennar fell $1.53, or 6.3 percent, to $22.65 at 9:30 a.m. in New York Stock Exchange composite trading. The stock has slid 54 percent this year through yesterday.