Lennar Corp. today joined a growing list of home builders that have cut their profit forecasts on a dismal housing market. Lennar expects earnings to be lower mostly because of increased sales incentives to unload inventory and land adjustments the company has made.
The company revised expectations for the third quarter, which ended on Aug. 31, with a new diluted earnings per share estimate of $1.25-$1.35 per share.
KB Home on Wednesday cut its full-year profit forecast, citing a challenging housing market and a decline in new home orders. And the National Association of Realtors Thursday lowered its 2006 forecast for home sales. NAR now expects existing home sales to fall 7.6 percent to 6.54 million, while new homes are expected to drop 16.1 percent to 1.08 million.
“The U.S. housing market has continued to deteriorate,” Stuart Miller, president and CEO of Lennar Corp., said in a statement Friday. “Given difficult market conditions, we have limited our land purchases while we have remained focused on even flow production and minimizing completed inventory.”
As a result, the company saw only a slight decline of 5 percent in preliminary net new orders for the quarter, Miller said. “However, increased sales incentives along with certain land adjustments were the primary factors in lowering our earnings per share estimate.”