By Shaina Mishkin

Investors on Monday can expect an updated read on the housing market -- and what, if anything, changes to policy have meant for home building -- when Lennar releases its second quarter earnings report.

Builders have been plagued this year by questions about how increased tariffs and immigration enforcement would impact their businesses. The iShares U.S. Home Construction exchange-traded fund, which tracks companies related to home construction, was down about 12.7% year to date as of Friday's close, and Lennar Class A shares are down 17.1%, according to Dow Jones Market Data.

With policy and markets in flux, investors shouldn't be surprised if the answer is "not much yet." Lumber futures ran up in anticipation of the tariff announcement -- but pulled back after the building material wasn't included in the blanket tariffs announced in April, according to prices provided by Dow Jones Market Data.

Macroeconomic conditions, such as a slow housing market and changes in labor demand, could mean that any impact from immigration policy enforcement is blunted -- for now, at least. With the surge of multifamily units under construction past its peak, there is "not an oversupply, but probably a healthy supply" of labor, notes Wedbush analyst Jay McCanless.

That wouldn't be a change for Lennar. The builder as of March "had no impact to our costs from tariffs," co-CEO Jonathan Jaffe said on the company's earnings call at the time, adding that the same was true for knock-on effects from immigration policy enforcement. "We expect to be as well positioned as possible, should any disruptions present themselves."

Rather, the biggest damper on the housing market right now could be consumer jitters. Bank of America in late May reported that 60% of prospective buyers and current owners couldn't tell whether it was a good or bad time to buy a home, up from 57% in 2024 and fewer than half in 2023. "A majority of buyers feel the market is headed in the right direction, but many are still planning to wait for more favorable conditions before they decide to take action," Matt Vernon, Bank of America's head of consumer lending, said in a statement.

The housing market could be at a pivot point, Barron's previously reported : mortgage rates remain well above 6% and home prices are still high, but more homes for sale will add to buyers' options. That, in turn, will slow price growth or result in declines. More previously owned homes for sale, too, could mean that builders have to continue to discount or offer incentives to close a home sale.

That means investors will focused on Lennar's margin on home sales this quarter. As the housing market has remained tough, builders like Lennar have offered incentives, such as mortgage rate buy-downs or other perks, to close sales and keep volume up. That can take a bite out of builders' margins. Lennar in its first quarter reported an 18.7% margin on home sales, down from 21.8% one year prior.

"We see more of the same for the company, with its commitment towards even flow production and volume growth necessitating aggressive incentives and price cuts," Oppenheimer analyst Tyler Batory wrote in a June 11 note. "This should weigh on margin and EPS."

Analysts expect Lennar will report a 17.9% gross margin on home sales in its second quarter, down from 22.6% one year prior, according to FactSet. The company is expected to have earned $1.94 a share on roughly $8.2 billion in revenue, down from net earnings per diluted share of $3.45 on $8.8 billion in revenue one year prior.

The company will report its results after the market closes on Monday, and will discuss its earnings on a Tuesday morning conference call.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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June 16, 2025 09:14 ET (13:14 GMT)

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