Lennar: More rough sledding for housing
No. 1 home builder had been forecast for narrow 2Q profit; sees worsening conditions, continued losses in 3Q.
NEW YORK (CNNMoney.com) -- In another sign of trouble for the battered housing and home building market, No. 1 home builder Lennar reported an unexpected loss in its second quarter and warned of more losses and possibly tougher times ahead.
Even excluding $1.33 a share charge related to valuation adjustments, write-offs of option deposits and pre-acquisition costs, the company would have lost money, and it's not clear that analysts would exclude those charges when comparing results to their forecasts. Earnings tracker First Call had forecast a 5 cent a share profit for Lennar.
The company's statement talked of worse than expected weakness in the housing market, which it said made it impossible to give specific guidance going forward. But it does now expect a loss in the third quarter, when analysts had been forecasting a 25 cent a share profit according to First Call.
"The housing market has continued to deteriorate throughout the second quarter," said CEO Stuart Miller in the company's statement. "The supply of new and existing homes has continued to increase resulting in declining home prices across our markets. As we look to our third quarter and the remainder of 2007, we continue to see weak, and perhaps deteriorating, market conditions."
Lennar is not the only builder reporting losses or weaker results by the downturn in housing. Rivals D.R. Horton (Charts, Fortune 500), Centex (Charts, Fortune 500), Pulte Homes (Charts, Fortune 500), KB Home (Charts, Fortune 500) and Toll Brothers (Charts, Fortune 500) have all seen their results hit by the slump in housing.
Later Tuesday the Census Bureau is due to report on new home sales in May. Economists surveyed by Briefing.com forecast that the pace of sales fell once again in the month to an annual rate of 925,000 homes from a 981,000 annual pace in April, when sharply lower prices helped to spur an increase in sales.