Lennar 2Q profit falls but tops Wall St. forecast

MIAMI — Lennar's net income dropped 65 percent in its second quarter compared with last year, when it logged a big tax benefit, and while the homebuilder delivered fewer homes, it still beat Wall Street expectations Thursday.

For the three months ended May 31 — which is also the traditional spring home-selling season — Lennar earned $13.8 million, or 7 cents per share. That compares with $39.7 million, or 21 cents per share, a year ago.

The prior-year period included an income tax benefit of $11 million, or 6 cents per share.

Analysts expected earnings of 4 cents per share, according to analysts polled by FactSet.

Economists are watching the performance of homebuilders closely. They expect the Labor Department to report later Thursday that applications for unemployment benefits were above 400,000 for a 10th straight week.

Each new home creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.

The news has not been good on the home front. Home sales sank 3.8 percent last month to a seasonally adjusted annual rate of 4.81 million homes, the weakest pace since November, the National Association of Realtors said Tuesday.

Lennar CEO Stuart Miller there was "very little evidence of a spring selling season," which is typically one of the busiest times of the year.

Lennar's revenue fell 6 percent to $764.5 million from $814.5 million. That still topped Wall Street's $644 million forecast.

The Miami company's Rialto Investments unit, which buys distressed real estate investments, saw its operating earnings climb to $9.8 million from $5.1 million.

Home deliveries slipped 8 percent to 2,682 homes, while new orders were flat at 3,204 homes. Lennar's backlog dipped 1 percent to 2,470 homes.

Other big homebuilders have reported sharp annual declines in home orders this spring, even amid a seasonal increase in traffic by prospective buyers. Lennar's previous quarter ended in February, just as the peak period for home sales got rolling.

Unlike last year, homebuilders haven't had an assist from federal tax credits that helped spur sales. Potential buyers are plagued by high unemployment, strict lending standards and fears that home prices will plunge again.

During the quarter, the average sales price of homes delivered rose 2 percent to $245,000 from $240,000 as sales incentives offered to homebuyers increased.

Lennar Corp. builds homes in 17 states and is one of the nation's largest builders of senior housing communities.