Lennar Corporation, Miami, FL, one of the nation’s largest homebuilders, reported revenues for its second quarter ended May 31, 2006, were up 56% to $4.6 billion. Profit was up 39% to $324.7 million.
Stuart Miller, president and Chief Executive Officer of Lennar Corporation, said: “After a long period of steady growth, the homebuilding industry has slowed, as evidenced by lower new orders and higher cancellation rates in many geographic markets across the country. These conditions are primarily the result of speculators exiting the market and changing homebuyer sentiment. Although current market conditions have softened, we believe favorable demographic trends and high employment levels bode well for long-term homebuilding fundamentals.
“… We are experiencing slower new orders and higher cancellation rates. Consequently, the second half of the year will be more challenging. As a result, we are focusing our efforts on partially offsetting the effects of increased sales incentives by reducing land costs, production costs and selling, general and administrative expenses.’
Homebuilding
Revenues from home sales increased 53% in the second quarter of 2006 to $4 billion from $2.6 billion in 2005. Revenues were higher primarily due to a 40% increase in the number of home deliveries and a 10% increase in the average sales price of homes delivered in 2006. The average sales price of homes delivered increased to $322,000 in the second quarter of 2006 from $293,000 in 2005.
However, new orders during the second quarter of 2006 decreased to 11,757 homes, from 12,095 homes last year; and Lennar’s backlog as of May 31, 2006 was 17,990 homes with a backlog dollar value of $6.5 billion, compared to 20,536 homes, with a backlog dollar value of $7.3 billion at May 31, 2005 and 19,458 homes with a backlog dollar value of $7.1 billion at February 28, 2006.
Six Months Ended May 31, 2006
Revenues from home sales increased 44% in the six months ended May 31, 2006, to $6.9 billion from $4.8 billion in 2005. Revenues were higher primarily due to a 30% increase in the number of home deliveries and an 11% increase in the average sales price of homes delivered in 2006. New home deliveries, excluding unconsolidated entities, increased to 21,410 homes in the six months ended May 31, 2006, from 16,528 homes last year.
In the six months ended May 31, 2006, new home deliveries were higher in each of the company’s regions, compared to 2005. The average sales price of homes delivered increased to $324,000 in the six months ended May 31, 2006, from $292,000 in 2005. However, new orders during the six months ended May 31, 2006, were 21,550 homes, which was essentially the same as the 21,555 new orders during the six months ended May 31, 2005, and the 21,850 new orders received during the second half of 2005.
For details on Lennar’s second-quarter and year-to-date earnings, click here.
