Home Builder Posts 28% Drop in Q1 Orders

Lennar Corp. (LEN), a major U.S. home builder, reported this week a first-quarter net loss of $155.9 million — or 98 cents per share — for the quarter ended Feb. 28, 2009. A 38 percent decline in home orders and a 12 percent decrease in average sales price from the same quarter last year drove the company’s narrowed home sales revenues — down 45 percent from last year to $522.8 million. “Despite historically low interest rates and some indicators pointing toward market stabilization, low consumer confidence, increased unemployment and growing foreclosure rates negatively impacted new home sales in most of our markets,” president and CEO Stuart Miller said in a company earnings statement. “While we are hopeful that the recent actions taken by the Federal government will help stimulate housing demand and restore consumer confidence, we continue to adjust our business to adapt to market conditions.” The company reported delivering 2,136 new homes in the first quarter 2009, down from 3,437 homes in the year-ago period. Administrative expenses were reduced by $73.8 million — or 42 percent — from the year-ago quarter, primarily due to layoffs, according to the company. The company’s financial services segment posted $0.5 million in earnings for the quarter, compared with $9.7 million in losses at the segment in the year-ago quarter. The bit of good news for the segment was the result of “cost reductions” in mortgage and title operations, the company said. Miller told investors in a conference call earlier this week that improved March sales are not “defining a trend yet,” but simply indicative of seasonality. He did not rule out, however, the signs of an approaching bottom, according to an article posted Tuesday by Big Builder News. “One can sense that resolution is not too far off,” he said, according to the article. “The home building market will rebound. It will have to rebound in order to bring the rest of the market to its feet.” The announcement let a bit of steam out of the argument for an improving housing market that has been building in recent weeks. But indicators are looking slightly better for existing home sales. After falling almost 8 percent in January, the activity of pending home sales reversed in February, rising 2.1 percent, according to data released by the National Association of Realtors Wednesday — indicating existing home sales will soon climb as well. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.