Lennar profit plummets

Homebuilder reports 73% decline in quarterly net income amid ongoing softness in housing market.

By Grace Wong, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Homebuilder Lennar said Tuesday its profit plummeted 73 percent in the latest quarter amid ongoing weakness in the housing market and turmoil in the subprime mortgage sector.

The builder said net income sank to $68.6 million, or 43 cents a share in the first quarter ended Feb. 28. Revenue dived 14 percent to $2.8 billion.

The company also said it would not meet its previously forecast 2007 earnings goal and didn't issue a new outlook.

In the year-earlier period, Lennar posted net income of $258.1 million, or $1.58 a share, on revenue of $3.2 billion.

Overall weakness in the housing market was made worse by problems in the subprime lending sector, Lennar (Charts) CEO Stuart Miller said.

The real estate market has been cooling for some time now, but problems in the subprime mortgage sector have revived concerns that the housing slowdown could send the economy into a recession.

The Miami-based homebuilder's results come a day after a government report showed a slump in new home sales.

The Census Bureau report said the pace of new home sales fell to their slowest level in more than six years amid an oversupply of homes in the market.

Lennar said softness in the market is likely to persist. "While some markets are performing better than others, the typically stronger spring selling season has not yet materialized," Miller said in a statement.

The company said the new home deliveries slipped 4 percent to 8,566 homes during the quarter. The average selling price of homes fell 7 percent to $303,000, due to a jump in incentives offered to buyers.

The homebuilder said it plans to keep cutting costs in an effort to improve profitability but that it wouldn't be able to provide an earnings outlook until the market stabilizes.

Lennar is the latest homebuilder to report weak quarterly results. KB Home (Charts) posted a plunge in profit last week, and Hovnanian Enterprises (Charts) reported a loss earlier this month.

New home sales: Slowest in 6 years Top of page