Lennar shares fell early Thursday as the homebuilder recorded lower-than-expected fiscal fourth-quarter results amid the impact of higher mortgage rates while the company projects a sequential decline in deliveries for the ongoing three-month period. Adjusted per-share earnings came in at $4.03 for the three months through November, down from $5.17 a year earlier, missing the FactSet-polled consensus of $4.16.
Revenue declined to $9.95 billion from $10.97 billion last year, trailing the Street's view for $10.06 billion. The stock dropped 9.2% in premarket activity. "In the course of our fourth quarter, the housing market that appeared to be improving as the Federal Reserve cut short-term interest rates, proved to be far more challenging as mortgage rates rose almost 100 basis points through the quarter," co-Chief Executive Stuart Miller said in a statement.
"Even while demand remained strong, and the chronic supply shortage continued to drive the market, our results were driven by affordability limitations from higher interest rates." Homebuilding revenue fell to $9.55 billion from $10.52 billion in the prior-year quarter. The company logged a 7% decrease in the number of home deliveries to 22,206, while the average sales price moved down 3% to $430,000.
New orders declined 3% to 16,895 homes. "In our fourth quarter, sales pace lagged expectations as interest rates climbed and our new orders fell short of expectations," Miller said. "We adjusted sales price, incentives, and margin in order to re-ignite sales and actively manage inventory levels." Gross margin on home sales was 22.1%, compared with 24.2% in the 2023 quarter, just shy of analysts' estimate for 22.4%, amid lower revenue per square foot and higher land costs, according to the company.
Selling, general and administrative expenses fell to $682 million from $687.8 million last year. For the first quarter of fiscal 2025, Lennar forecasts deliveries of 17,000 to 17,500 homes and a gross margin on home sales between 19% and 19.25%. "We remain optimistic that margins will normalize as affordability normalizes and our cost structure benefits from our volume," Miller said.
New orders are expected between 17,500 to 18,000 homes, while the company forecasts an average sales price of $410,000 to $415,000 for the ongoing quarter. The homebuilder anticipates delivering between 86,000 and 88,000 homes for the full year, according to Miller, compared with the 80,210 homes delivered in the prior fiscal year.
"We will not guide to full-year gross margin until we have a better sense of market conditions as the year unfolds," Miller said..