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Lennar Corporation (NYSE:LEN) reported second-quarter results that came in below market forecasts, as the homebuilder continued to contend with affordability pressures, elevated mortgage rates and cautious buyer sentiment across the U.S. housing market.

For the quarter ended 31 May 2026, Lennar generated adjusted earnings of $1.31 per share, excluding mark-to-market losses related to technology investments. Reported earnings per share were $1.24, narrowly missing analyst expectations of $1.25.

Revenue totalled $7.9 billion, down 2% from the prior year and below the consensus forecast of $8 billion.

The company delivered 20,519 homes during the quarter, representing a 2% increase from a year earlier.

However, the average sales price declined 5% year-on-year to $371,000, compared with $389,000 in the same period last year, reflecting continued affordability challenges and the need for pricing adjustments to support demand.

Shares of Lennar fell approximately 1.3% in premarket trading following the release of the results.

Executive Chairman, Chief Executive Officer and President Stuart Miller said the operating environment remained difficult, pointing to several long-standing challenges affecting the housing sector.

According to Miller, the quarter “was defined by the same stubborn headwinds that have challenged the housing market for the past several years – persistently elevated mortgage rates, constrained affordability, and cautious consumer sentiment, exacerbated by geopolitical uncertainty creating a resurgent inflation reading of 4.2% driven by higher energy prices.”

Lennar’s gross margin on home sales fell to 15.6%, compared with 17.8% in the year-earlier period.

The decline was primarily attributed to lower revenue per square foot and higher land acquisition costs, although some of the pressure was offset by improvements in construction expenses.

New orders declined 4% year-on-year to 21,749 homes during the quarter.

Meanwhile, the company ended the period with a backlog of 16,818 homes, representing a total value of approximately $6.6 billion.

Looking ahead, Lennar expects to deliver between 20,500 and 21,500 homes during the third quarter of 2026.

The projected average sales price is expected to range from $375,000 to $380,000, while the midpoint of the delivery forecast, at 21,000 homes, is broadly in line with market expectations.

Management also anticipates gross margin improving to around 16%, while selling, general and administrative expenses are expected to fall to between 8.8% and 9.0% of home sales.

Following the earnings release, Barclays analysts suggested the market reaction would likely be restrained.

“We expect a muted to slightly negative reaction tomorrow pending the call,” Barclays analysts said in a post-earnings note.

They added: “Investors tend to focus highly on the gross margin, where guidance did hit consensus, but we also think investors have come to understand that SG&A/op. margin and financial services earnings are more correctly the holistic way to view LEN results, given the interplay with gross margin.”

Lennar lowered its full-year 2026 delivery forecast to approximately 82,000 to 83,000 homes, citing continued pressure from elevated interest rates and ongoing geopolitical uncertainty.

Despite the softer outlook, the company continued returning capital to shareholders, repurchasing 5 million shares for $447 million during the quarter.

Lennar finished the period with $1.8 billion in cash within its homebuilding operations, providing significant liquidity as it navigates an uncertain housing market environment.

Lennar stock price