Lennar Corp Class A (NYSE:LEN) stock fell 6.24% (As on December 17, 11:16:04 AM UTC-4, Source: Google Finance) after the company reported mixed result for the fourth quarter of FY25, as affordability pressures continued to weigh on homebuying demand. The company delivered 23,034 homes during the quarter, a 4% increase versus the prior year, while new orders rose 18% to 20,018 homes. However, the average sales price declined 10% year-on-year to $386,000, reflecting increased use of incentives to attract buyers in a market constrained by affordability challenges. Gross margin on home sales contracted significantly to 17.0% from 22.1% in the year-ago quarter, primarily due to lower revenue per square foot, higher land costs, and continued incentives averaging approximately 14%. Excluding mark-to-market gains on technology investments of $123 million and one-time loss of $156 million on the previously announced Millrose Properties, Inc. (“Millrose”) exchange offer, fourth quarter net earnings attributable to Lennar in 2025 were $514 million compared to fourth quarter net earnings attributable to Lennar in 2024 of $1.1 billion, excluding mark-to-market gains on technology investments of $13 million.

LEN in the fourth quarter of FY25 has reported the adjusted earnings per share of $2.03, missing the analysts’ estimates for the adjusted earnings per share of $2.21. Higher interest rates have strained affordability and weighed on U.S. homebuilders’ earnings in recent quarters, further compounded by renewed cost uncertainty tied to tariffs on lumber and other key building materials. The company had reported the adjusted revenue of $9.04 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $9.01 billion. Revenues from home sales decreased 7% in the fourth quarter of 2025 to $8.9 billion from $9.5 billion in the fourth quarter of 2024. Operating earnings for the Financial Services segment were $133 million in the fourth quarter of 2025, compared to $154 million in the fourth quarter of 2024.

For the first quarter of fiscal 2026, Lennar expects to deliver between 17,000 and 18,000 homes with an average sales price between $365,000 and $375,000. The company anticipates gross margins of 15% to 16%, lower than the fourth quarter due to typical seasonal patterns and market conditions. It expects to deliver a total of 85,000 homes in 2026. Lennar continues to see margin compression as it leans on sales sweeteners – such as mortgage-rate buydowns – and contends with cost adjustments in a softening demand environment.