Lennar Corp - Class A

Lennar delivered a disappointing second quarter for fiscal 2025, missing Wall Street expectations as affordability pressures and weakened consumer confidence weighed heavily on results. The homebuilder posted GAAP EPS of $1.81, falling short of the $1.94 consensus estimate by 6.70%, while revenue slipped 4.6% year-over-year to $8.38 billion. The central culprit was a sharp compression in home sales gross margin, which fell to 17.8% from 22.6% a year earlier, as Lennar leaned aggressively into pricing incentives, cutting its average sales price 9% to $389,000 per home to keep volume moving. That strategy did sustain modest delivery growth to 20,131 units, and new orders rose 6% to 22,601 homes, but the cost in margin was significant. The broader homebuilding sector has flagged a softer-than-expected spring selling season, with localized weakness in markets like Sacramento and Seattle adding to the headwinds. Looking ahead, management guided Q3 deliveries of 22,000-23,000 homes at an average sales price of $380,000-$385,000, suggesting further near-term price discipline will remain necessary.