LENNAR CORP /NEW/ (LEN) Q3 2025 Earnings Summary

Executive Summary

Q3 2025 showed resilient volume but profitability pressure: total revenue $8.81B vs $9.05B S&P Global consensus (miss) and Primary EPS (S&P normalized) $2.00 vs $2.09 consensus (miss), as incentives and lower ASP compressed gross margin to 17.5% . S&P Global estimates marked with “”.
Demand indicators improved: new orders +12% YoY to 23,004 homes; active communities rose to 1,664; backlog units held steady, though backlog dollar value declined on lower pricing .
Management shifted stance to “moderate volume” to help establish a floor on margins; Q4 guide: deliveries 22,000–23,000, ASP ~$380k–$390k, gross margin ~17.5%, SG&A 7.8%–8.0%, EPS $2.10–$2.30; FY deliveries cut to 81,500–82,500 (from 86,000–88,000 previously) .
Efficiency momentum persists: record cycle time of 126 days, inventory turns 1.9x, and Financial Services earnings of $178M helped offset housing margin compression; quarterly dividend of $0.50 declared on Sept 26 .

What Went Well and What Went Wrong

What Went Well

Operational efficiency: cycle time improved to a company record 126 days; inventory turns increased to 1.9x, with <2 completed unsold homes per community; management highlighted a “production-first approach” and tech-enabled processes improving cost structure .
Quote: “Inventory turns improved to 1.9 times, and cycle time improved to 126 days, the shortest cycle time we’ve ever experienced.” – Jon Jaffe .
Demand resilience: new orders +12% YoY to 23,004; active communities increased to 1,664; sales pace held at 4.7 homes/community/month, aided by targeted incentives (rate buydowns) .
Quote: “We recorded 23,004 new orders… we used targeted incentives, including mortgage rate buydowns, to sustain momentum.” – Jon Jaffe .
Financial Services strength: operating earnings rose to $177–$178M, driven by higher profit per locked loan (higher secondary margins) .

What Went Wrong

Pricing/margin compression: average sales price fell to $383k (from $422k YoY); gross margin on home sales declined to 17.5% (from 22.5% YoY) due to higher land costs and lower revenue per sq. ft., partially offset by lower construction costs .
Elevated incentives and SG&A: incentives increased (sales incentives 14.3% in the quarter), and SG&A rose to 8.2% of home sales on reduced operating leverage and higher marketing/selling expenses .
EPS and revenue misses vs S&P consensus: Primary EPS (S&P normalized) $2.00 vs $2.09; revenue $8.81B vs $9.05B (Multi-Family also swung to a loss vs a one-time gain last year) *.

Financial Results

Headline results vs prior quarter and prior year

Metric	Q3 2024	Q2 2025	Q3 2025
Total Revenues ($B)	$9.42	$8.38	$8.81
Diluted EPS (GAAP)	$4.26	$1.81	$2.29
Homebuilding Revenues ($B)	$9.05	$7.84	$8.25
Gross Margin on Home Sales (%)	22.5%	17.8%	17.5%
SG&A as % of Home Sales	6.7%	8.8%	8.2%
Deliveries (Homes)	21,516	20,131	21,584
Average Sales Price ($)	$422,000	$389,000	$383,000
New Orders (Homes)	20,587	22,601	23,004
Backlog (Homes)	16,944	15,538	16,953
Backlog ($B)	$7.75	$6.48	$6.65

Segment breakdown (YoY)

Segment	Q3 2024 Revenue ($MM)	Q3 2024 Op. Earn. ($MM)	Q3 2025 Revenue ($MM)	Q3 2025 Op. Earn. ($MM)
Homebuilding	$9,046	$1,478	$8,254	$760
Financial Services	$273	$144	$314	$178
Multifamily	$93	$79	$228	($16)
Lennar Other	$4	$20	$14	$62

KPIs and operating metrics

KPI	Q2 2025	Q3 2025
Sales Pace (homes/community/month)	4.7	4.7
Starts Pace (homes/community/month)	5.1	4.4
Sales Incentives (% of price)	13.3%	14.3%
Cycle Time (days)	132	126
Inventory Turns (x)	1.8x	1.9x
Active Communities (count)	1,617	1,664
Homebuilding Debt/Total Capital	11.0%	13.5%
Homebuilding Cash & Equivalents ($B)	$1.17	$1.41
Controlled Homesites (%)	98%	98%
Years Supply of Owned Homesites	0.1 yrs	0.1 yrs

Actual vs S&P Global consensus

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($B)*	$7.43*	$8.19*	$9.05*
Revenue Actual (S&P) ($B)*	$7.63*	$8.38*	$8.81*
Primary EPS Consensus Mean ($)*	$1.71*	$1.94*	$2.09*
Primary EPS Actual (S&P) ($)*	$2.14*	$1.90*	$2.00*
Beat/Miss (Revenue)*	Beat*	Beat*	Miss*
Beat/Miss (EPS)*	Beat*	Miss*	Miss*

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Deliveries (FY)	FY 2025	86,000–88,000 (as of Q2 call)	81,500–82,500	Lowered
New Orders (Homes)	Q4 2025	N/A	20,000–21,000	New
Deliveries (Homes)	Q4 2025	N/A	22,000–23,000	New
Average Sales Price ($)	Q4 2025	N/A	$380,000–$390,000	New
Gross Margin on Home Sales (%)	Q4 2025	N/A	~17.5%	New
SG&A (% of Home Sales)	Q4 2025	N/A	7.8%–8.0%	New
Financial Services Op. Earnings ($MM)	Q4 2025	N/A	$130–$135	New
EPS ($)	Q4 2025	N/A	$2.10–$2.30	New
Corporate G&A (% of Total Rev)	Q4 2025	N/A	~1.9%	New
Tax Rate (%)	Q4 2025	N/A	~23.5%	New
Multifamily Op. Earnings ($MM)	Q4 2025	N/A	~($30)	New
Lennar Other Op. Earnings ($MM)	Q4 2025	N/A	~($35) excl. mark-to-market	New
Dividend per share ($)	Next Payable	N/A	$0.50 declared Sept 26 (payable Oct 27)	New

Earnings Call Themes & Trends

Topic	Q1 2025 (Mar)	Q2 2025 (Jun)	Q3 2025 (Sep)	Trend
Technology initiatives	Focus on matching production/sales; asset-light shift post Millrose spin	“Lennar Machine” for dynamic pricing/lead response; Palantir land system; JD Edwards E1 ERP transition	Emphasis on Opendoor partnership and AI’s role in homeownership journey	Expanding scope; deeper integration
Supply chain & costs	Cycle time 137 days; inventory turn 1.7x	Direct construction costs lower; cycle time 132 days; pushes even-flow to drive cost cuts	Record 126-day cycle time; 1.9x inventory turns; quality/warranty spend down ~35% YoY	Continuous improvement
Tariffs/macro	Affordability challenged by higher rates	No tariff cost impact to date; contingency sourcing ready	Rates trended down late-Q; cautious optimism; tax law “One Big Beautiful Bill Act” noted, no material FY25 impact expected	Macro easing could help
Land strategy	Millrose spin to land-light model	Land banking certainty as strategic lever	Flexibility to pause or adjust takedowns; not constrained by land relationships	Asset-light with flexibility
Regional trends	—	Softer in PNW, NorCal, SW, and some East markets	Florida inventories stabilizing; existing + new home inventory moderation aiding stability	Stabilizing in select markets
Demand/affordability & incentives	Incentives bridging affordability	Incentives ~13.3% to hit pace	Incentives ~14.3%; moderating volume to set margin floor	Incentives elevated; selective pullback

Management Commentary

“This is an opportune time to pause and let the market catch up… we will reduce our delivery expectations for the fourth quarter to 22,000 to 23,000 homes, and… to 81,500 to 82,500 for the full year.” – Stuart Miller .
“Our gross margin drifted down to 17.5%, while our SG&A expenses came in at 8.2%, reflecting the soft market conditions.” – Stuart Miller .
“Inventory turns improved to 1.9 times, and cycle time improved to 126 days, the shortest cycle time we’ve ever experienced.” – Jon Jaffe .
“Our Q4 tax rate [will be] approximately 23.5%… corporate G&A ~1.9% of total revenues… EPS range approximately $2.10 to $2.30.” – Diane Bessette .

Q&A Highlights

Strategy/tone: Management framed the pullback as a short “breather” to help set a margin floor rather than a structural strategy change; elasticity varies by market/community .
Land flexibility: Land bank structures allow pause/adjustments; ability (albeit costly) to walk away exists; land relationships are not a constraint on strategy .
Margin sensitivity to rates: Lower buydown costs as rates decline could add ~100 bps to gross margin over time, but timing is uneven; management agreed with the framework but warned of a “rocky road” .
Cancellations and regional dynamics: Cancellation pace remained consistent QoQ; Florida inventories stabilizing, improving pricing environment over time .
Millrose/land-bank economics: About 25% of YTD deliveries from Millrose vehicle; rising share and more diversified capital partners aim to lower option/land costs over time .

Estimates Context

Q3 2025 vs S&P Global consensus: revenue $8.81B vs $9.05B (miss), Primary EPS $2.00 vs $2.09 (miss). Prior quarters: Q2 revenue beat but EPS slight miss; Q1 both revenue and EPS beat. Management’s GAAP EPS was $2.29, but excluding mark-to-market tech gains EPS was $2.00, aligning with S&P “Primary EPS” actual used for consensus comparison .
Values retrieved from S&P Global.

Where estimates may need to adjust:

FY deliveries reduced to 81,500–82,500 implies lower revenue base for Q4 and potentially FY EPS; Q4 gross margin held at ~17.5% suggests limited near-term margin recovery until rates and pricing firm .
Financial Services guide ($130–$135M) and tax rate (~23.5%) underpin Q4 EPS $2.10–$2.30; any rate tailwind or incentive moderation could drive upside to gross margin beyond guided ~17.5% .

Key Takeaways for Investors

Near-term margin floor: Management prioritizes margin stabilization (~17.5% guide) over pushing volume; watch for incentive moderation as rates ease .
Volume recalibration: FY deliveries cut to 81.5k–82.5k should reset expectations; Q4 deliveries 22k–23k and EPS $2.10–$2.30 frame the near-term earnings power .
Efficiency as offset: Record 126-day cycle time, 1.9x turns, and strong Financial Services ($177–$178M) provide ballast against ASP/margin pressure .
Demand capacity intact: New orders +12% and rising community count indicate share capture and production capacity when affordability improves .
Land-light flexibility: Land banking terms allow pacing and cost recalibration; not a constraint on lowering starts or takedowns if needed .
Dividend maintained: $0.50 declared for October payment supports TSR while LEN navigates the margin reset .
Set up for rate tailwinds: If mortgage rates drift toward/below 6%, management expects firmer demand and improved pricing power, a potential catalyst into 2026 .

Appendix: Additional Details

Non-GAAP: Company reports EBIT as a supplemental non-GAAP measure; management emphasizes reconciliation to GAAP and its limitations .
One-time/mark-to-market: Q3 included $99M mark-to-market gains in “Lennar Other” (tech investments), which lifted GAAP EPS to $2.29; excluding MTM, EPS was $2.00 .
Multifamily: Q3 operating loss of $16M vs prior-year profit boosted by a $179M one-time gain in LMV Fund I; Q4 guide implies ~($30M) .

Citations:
Press release and 8-K: .
Earnings call (Q3 2025): .
Prior quarters (Q2/Q1 2025): .
Dividend PR: .
Estimates (S&P Global): Table values marked with “*”.