Lennar cuts delivery forecast as mortgage rates bite; Q2 margins rose

Lennar lowered its full-year delivery forecast Tuesday after mortgage rates kept buyers on the sidelines, even as margins widened and incentives eased in the fiscal second quarter.

The homebuilder now expects to close 82,000 to 83,000 homes in fiscal 2026, down from a prior range of 84,000 to 86,000. For the third quarter, Lennar projected earnings per share of $1.20 to $1.40, compared with $1.92 in the same period a year earlier. The guidance reflects rate headwinds that have cooled traffic and forced builders to offer rate buydowns and closing-cost concessions, executives said on the earnings call.

Gross margins on home sales widened during the second quarter, and the portion of sales price absorbed by incentives fell sequentially, the company said. Lennar kept construction costs in check and shifted mix toward higher-priced communities, where margins tend to run wider. Still, order volumes slipped. Net new orders declined from the prior-year quarter.

Land acquisition spending held steady during the quarter, and the company continued to buy back shares, repurchasing about $200 million of stock. Executives said they remain focused on managing inventory and controlling spec homes, a discipline that helped margins through the spring selling season.

The builder's community count rose 8% year over year, indicating the land pipeline is still adding new selling locations even as overall deliveries slow. That dynamic could help Lennar hold market share if demand recovers later this year. For now the macro backdrop remains the dominant variable.

Lennar carries an Alpha Score of 27 out of 100, labeled Weak within the consumer cyclical sector, according to AlphaScala's proprietary model on its LEN stock page. The score reflects the company's stretched valuation relative to earnings power in a rising-rate environment. The stock is down roughly 7% from its April high.

Lennar will report third-quarter results in September, when investors will get an early read on whether the spring slowdown has extended into summer.