By Kelly Cloonan and Nicholas G. Miller

Lennar logged lower profit in its latest quarter as the company continued to offer incentives to drive sales in a stagnant housing market.

The homebuilder said Tuesday the market remained challenged in the quarter even as interest rates moved slightly lower, hurt by affordability concerns, weak consumer confidence and the government shutdown.

In an effort to maintain sales momentum, the company continued to use incentives like mortgage rate buydowns, pushing home deliveries up 4% while average sales price fell. It also reduced its starts and sales pace as part of a recent strategy shift.

"While affordability and consumer confidence have remained challenging as interest rates moderated, we have focused on adapting to a new normal as the market finds its footing," Co-Chief Executive Stuart Miller said.

Homebuilders have suffered from stagnant home sales as high mortgage rates and economic uncertainty have put off buyers. Many builders have been forced to offer sales incentives, often in the form of mortgage buydowns, cutting into their margins.

More than other builders, Lennar has emphasized a strategy of pace ahead of price, seeking to maintain sales volume by offering aggressive incentives even at the expense of profit margins, according to analysts. The company said in September it would pull back on that strategy, reducing sales volume expectations in order to prevent its margins from falling further.

For the fiscal year, the company expects to deliver about 85,000 homes, compared to 82,583 in fiscal 2025.

Homebuilders have been hopeful that they might see an uptick in demand in time for the spring selling season as interest rates fall. Analysts have said that mortgage rates are likely to remain elevated as a weakening labor market has raised concerns that the housing market may remain stubbornly slow, even with lower mortgage rates.

Meanwhile, the number of existing homes for sale has increased, providing more competition to builders seeking to unload their inventory of new homes.

Lennar posted a profit of $490.2 million, or $1.93 a share, compared with $1.1 billion, or $4.06 a share, a year earlier. Analysts polled by FactSet were looking for earnings of $2.21 a share.

Revenue declined to $9.4 billion from $9.9 billion, but that beat Wall Street estimates of $9 billion.

The company's home deliveries ticked up 4% to 23,034, while its average sales price fell to $386,000 from $430,000 a year ago.

For the fiscal first quarter, the company guided for deliveries of 17,000 to 18,000, an average sales price of $365,000 to $375,000 and gross margin of 15% to 16%.

Write to Kelly Cloonan at kelly.cloonan@wsj.com and Nicholas G. Miller at nicholas.miller@wsj.com

(END) Dow Jones Newswires

December 16, 2025 18:00 ET (23:00 GMT)

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