Lennar Misses Earnings Expectations Despite Revenue Beat and Surge in New Orders
Miami, Wednesday, 17 December 2025.
Despite exceeding revenue forecasts and seeing an 18% surge in new orders, Lennar’s Q4 profits dropped by over half to $490 million as tighter margins weighed on performance.
Earnings Miss Amidst Revenue Growth
Lennar Corporation (LEN) released its fourth-quarter fiscal 2025 results on Tuesday, December 16, revealing a complex financial picture where strong top-line demand contrasted with eroding profitability [2][3]. While the homebuilder generated $9.37 billion in revenue—surpassing Wall Street expectations of $9.13 billion—net earnings plummeted to $490 million, or $1.93 per share [3]. This represents a significant decline of -52.463% from the $4.06 per share reported in the same period last year [2]. Even after adjusting for non-recurring items, earnings of $2.03 per share fell short of the $2.23 consensus estimate projected by analysts [3].
Margin Compression and Pricing Strategy
The contraction in Lennar’s bottom line was driven largely by margin compression and lower sales prices, reflecting the broader affordability challenges facing the housing market. The average sales price (ASP) of homes delivered during the quarter fell to $386,000, down from $430,000 in the fourth quarter of 2024 [2]. Consequently, gross margins on home sales tightened to 17.0%, a steep drop from the 22.1% margin achieved a year prior [2]. These figures underscore the company’s strategy to prioritize volume over price to maintain inventory flow in a high-interest-rate environment.
Operational Resilience and Market Demand
Despite the earnings miss, Lennar demonstrated robust operational momentum, signaling that demand for new homes remains resilient. New orders for the quarter increased by 18% year-over-year to 20,018 homes, while deliveries saw a modest rise of 4% to 23,034 homes [1][2]. Executive Chairman Stuart Miller noted that while the market remains “constrained by affordability challenges” and weak consumer confidence, the company is maintaining a disciplined commitment to increasing housing supply [2]. As of November 30, 2025, Lennar’s backlog stood at 13,936 homes with a dollar value of $5.2 billion [1].
Strategic Adjustments and 2026 Outlook
Looking ahead to the first quarter of fiscal 2026, Lennar has issued guidance that suggests continued margin pressure. The company expects to deliver between 17,000 and 18,000 homes with an average sales price ranging from $365,000 to $375,000 [2]. Gross margins are projected to dip further, landing between 15.0% and 16.0% [2]. The fiscal 2025 report also detailed significant one-time financial adjustments, including a $156 million loss related to the Millrose exchange offer, partially offset by $123 million in mark-to-market gains on technology investments [2]. Following the release of these results and the soft guidance, Lennar’s stock experienced a dip in trading [4].