Builder: Housing woes continue to worsen
Lennar, nation's No. 3 builder by revenue, sees volume, value of sales plunge, forcing fourth straight quarterly loss.
NEW YORK (CNNMoney.com) -- Home builder Lennar reported its fourth straight quarterly loss Thursday and warned that conditions in the battered housing market continue to worsen due to a glut of homes on the market and ongoing problems in the mortgage market.
Lennar (LEN, Fortune 500), the nation's No. 3 builder by revenue, reported a net loss of $88.2 million, or 56 cents a share, in the quarter. The company posted a profit of $68.6 million, or 43 cents a share, in the year-earlier period.
The loss was still better than what Wall Street had expected. Analysts surveyed by earnings tracker First Call had been looking for a loss of $1.07 a share.
"Lower consumer confidence has quieted demand among prospective homebuyers and deterred them from a buying decision, while contraction in the lending markets has reduced the availability of credit for those prospective homebuyers that do wish to buy a home," CEO Stuart Miller said in a statement.
Miller added that the glut of homes on the market continues to rise due to foreclosures and homeowners who have been forced to dump homes they can no longer afford.
"The housing industry continues to be impacted by an unfavorable supply and demand relationship, which restricts the volume of new home sales and, concurrently, depresses home prices in most markets across the country," he said.
Revenue from home building plunged 64% in the period to $953.1 million from $2.6 billion a year ago. The company saw the average sales price of one of its homes fall 8% to $278,000 in the first quarter, partly due to higher sales incentives it needed to offer to maintain demand. The average incentive on one of its homes reached $48,000 in the quarter, up $2,500 from a year earlier.
But what really cut into revenue was a nearly 60% drop in the number of homes delivered to customers to 3,437 from 8,566 a year earlier.
Total revenue, which includes its financing operations, fell 62% to $1.1 billion, which fell 5% short of the forecasts.
The problems hitting Lennar have been widespread through the industry. The nation's largest builders - No. 1 Centex (CTX, Fortune 500), No. 2 D.R. Horton (DHI, Fortune 500), No. 4 Pulte (PHM, Fortune 500), No. 5 KB Home (KBH, Fortune 500) and No. 6 Hovnanian Enterprises (HOV, Fortune 500) and No. 7 Toll Brothers (TOL, Fortune 500) - have all reported losses recently. On Wednesday the Census Bureau reported the lowest level of new home sales in 13 years in February.