Positive demand and sales trends continued through the second quarter for Lennar, with the home builder recording a 19% increase in new orders and a 15% increase in deliveries on a year-over-year basis.

Executive chairman and co-CEO Stuart Miller said home buyers remained responsive to increased sales incentives despite interest rate movement and deflated consumer sentiment.

“We remained focused on consistent product pace driving sales pace, while using pricing, incentives, marketing spend, and margin adjustment to enable consistent sales volume in a fluctuating interest rate environment,” Miller said.

Deliveries in the second quarter, ended May 31, increased to 19,690 homes. The average sales price of homes delivered decreased to $426,000 in the second quarter compared to $449,000 in the prior-year period. Lennar said the decrease can be attributed to pricing to market through an increased use of sales incentives and product mix. Net new orders increased to 21,293 homes in the second quarter while Lennar started approximately 21,400 homes.

Jon Jaffe, co-CEO and president, said Lennar’s starts pace and sales pace were 5.8 homes and 5.7 homes per community in the second quarter, respectively, as the builder moves toward an even flow operating model.

“Our cycle time was down to 150 days, or 30% year over year, as our production first focus has positively impacted our production times, while our inventory turn improved to 1.6 times, reflecting broader efficiencies,” Jaffe said. “Concurrently, the Lennar Machine continued to carefully match our sales pace to our production pace using our digital marketing and dynamic pricing models.”

At the end of the second quarter of 2024, Lennar reported a backlog of 17,873 homes with a dollar value of $8.2 billion, compared to 20,214 homes with a dollar value of $9.5 billion at the end of the second quarter of 2023.

“We continue to remain enthusiastic about our current execution and our future. We have remained focused on our operating strategies, while at the same time being observant of current economic and market trends,” Lennar said. “This has positioned us particularly well as the economic environment continues to define itself throughout the complicated election year in 2024.”

Revenues from home sales increased 9% to $8.4 billion in the second quarter, driven primarily by the increase in home deliveries. Lennar reported second quarter profit of $954 million, or $3.45 per share, increases of 9.4% and 15% on a year-over-year basis, respectively. The home builder’s second quarter profits per share bested analyst projections, while home sales revenue came in short of analyst expectations.

“Our primary goal is to migrate to a pure play, asset light manufacturing model that will be supported by a durable, just in time home site delivery program that will enable simultaneous growth and cash flow,” Miller said.

Lennar continued to migrate toward a land light strategy in the second quarter, improving years supply of owned home sites to 1.2 years from 1.7 years in the second quarter of 2023. Additionally, the builder increased its controlled home site percentage to 79% from 70% in the prior-year period.

“We remain focused on our ‘land strategies’ initiative in order to intensify our land light focus and assure consistency of execution now and in the future as we embrace an ever-more focused manufacturing model for Lennar.”

In the second quarter, Lennar reported an operating loss of $20 million from its multifamily segment. In the second quarter of 2023, the builder experienced an operating loss of $8 million. Despite multifamily softness, Miller said Lennar is increasing its focus in the single-family for-rent product.

“We have also continued working on additional product approaches to help build a more healthy housing market. We have intensified our focus on build-to-rent—community scale—and single-family for-rent—scattered homes—across markets,” Miller said. “We believe we can and need to build additional production for professionally owned housing that can fill an additional need. Those professional purchasers need cost efficiencies in today’s interest rate environment to make their rents attainable and we can provide that.”

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