Lennar Reports Lower Than Expected Q1 Earnings and Revenue, Sees Year-Over-Year Increase in New Home Orders

Lennar Corporation Q1 2026 Earnings Overview

Lennar Corporation (NYSE: LEN) released its financial results for the first quarter of fiscal 2026, revealing that both adjusted earnings and total revenue fell short of analyst expectations and declined compared to the previous year.

The company’s performance was hampered by ongoing affordability issues in the housing market and waning consumer confidence. In an effort to address affordability, Lennar reduced its average sales price, which negatively affected revenue growth for the quarter.

Despite these headwinds, Lennar continues to implement strategies aimed at navigating market volatility, focusing on increasing housing starts, sales, and closings to drive long-term efficiency. The company’s initiatives to make homes more affordable are expected to support higher sales volumes and help restore buyer confidence.

Following the earnings release, LEN shares edged up 0.3% in after-hours trading.

Quarterly Financial Highlights

• Adjusted earnings per share came in at $0.88, missing the consensus estimate of $0.96 and down from $2.14 in the same quarter last year.
• Total revenue was $6.62 billion, trailing the expected $6.83 billion and representing a 13.2% decrease from $7.63 billion a year ago.

Segment Performance

Homebuilding

• Revenue from homebuilding reached $6.3 billion, a 13.5% year-over-year decline.
• Home sales contributed $6.27 billion, down 13.4% from the prior year.
• Land sales totaled $15.2 million, compared to $35.3 million a year earlier.
• The “Other homebuilding” segment added $10.5 million, up from $8 million last year.
• Home deliveries dropped 5.4% to 16,863 units, below the projected 17,480 units.
• The average sales price for delivered homes was $374,000, an 8.3% decrease year over year.
• New orders rose slightly by 0.9% to 18,515 homes, but the total value of net orders fell 3.9% to $7.14 billion.
• Backlog at quarter-end increased 18.6% to 15,588 homes, with potential revenue from backlog up 4.8% to $6.04 billion.
• Gross margin on home sales was 15.2%, down 350 basis points from last year, mainly due to lower revenue per square foot and higher land costs, partially offset by reduced construction expenses. SG&A expenses as a percentage of home sales rose to 9.8%.

Financial Services

• Revenue for this segment fell 22.2% to $215.6 million.
• Operating earnings dropped to $91.3 million from $143.5 million a year ago.

Lennar Multi-Family

• Revenue increased 30.5% to $82.5 million.
• The segment posted operating earnings of $17.9 million, compared to a small loss last year.

Lennar Other

• Revenue surged to $22.9 million, up 208.8% from $7.4 million a year earlier.
• The operating loss narrowed to $5.2 million from $89.3 million in the prior year.

Financial Position

• At the end of the quarter, Lennar held $2.09 billion in homebuilding cash and equivalents, down from $3.44 billion at the end of fiscal 2025.
• Total homebuilding debt stood at $4.07 billion, up from $2.21 billion at the prior fiscal year-end.
• The homebuilding debt-to-capital ratio increased to 15.7% from 8.9%.
• Lennar repurchased 2 million shares for $237 million during the quarter.

Outlook for Q2 Fiscal 2026

• Expected home deliveries: 20,000 to 21,000 units (vs. 20,131 a year ago).
• Anticipated average sales price: $370,000 to $375,000 (down from $389,000 last year).
• Projected gross margin on home sales: 15.5% to 16% (vs. 17.8% a year ago).
• SG&A expenses as a percentage of home sales: 8.9% to 9.1% (compared to 8.8% last year).
• New orders forecast: 21,000 to 22,000 units (down from 22,601 a year ago).
• Financial Services operating earnings expected between $100 million and $110 million (vs. $157.3 million last year).

Lennar’s Zacks Rank and Alternative Stock Picks

Lennar currently holds a Zacks Rank #4 (Sell). Investors seeking stronger opportunities in the construction sector may consider the following companies:

• Construction Partners, Inc. (NASDAQ: ROAD): Zacks Rank #1 (Strong Buy). The company has delivered an average earnings surprise of 85.3% over the past four quarters. The stock is down 9.8% over the last six months. Consensus estimates suggest fiscal 2026 sales and EPS could rise by 24% and 30.9%, respectively.
• Sterling Infrastructure, Inc. (NASDAQ: STRL): Zacks Rank #1. Sterling has posted an average earnings surprise of 15.7% over the last four quarters, with shares up 22.8% in the past six months. Projections indicate 2026 sales and EPS may increase by 24.6% and 25.8%, respectively.
• Comfort Systems USA, Inc. (NYSE: FIX): Zacks Rank #1. The company has achieved an average earnings surprise of 35.2% over the past four quarters, and its stock has soared 76.1% in the last six months. Consensus forecasts point to 2026 sales and EPS growth of 20.3% and 26.7%, respectively.