Lennar Corporation has recently released its 10-K report for the fiscal year ended November 30, 2024. Lennar is a leading homebuilder in the United States, operating primarily under the Lennar brand. The company's operations include the construction and sale of single-family attached and detached homes, development and sale of residential land, management of multifamily rental properties, and financial services such as residential mortgage financing and title insurance.
In the Management’s Discussion and Analysis of Financial Condition and Results of Operations, Lennar outlined its outlook for the coming quarters. The company noted that it expected affordability to ease with the reduction in interest rates by the Fed. However, mortgage rates climbed approximately 100 basis points instead of falling, causing sales to stall at existing price and incentive levels. Lennar increased incentives, provided interest rate buy-downs, and adjusted prices to stimulate sales and avoid inventory build-up. The company moderated its expectations for margins and sales in the first quarter of fiscal 2025 as the market adjusts and stabilizes.
Lennar also highlighted challenges such as wavering consumer confidence, elevated acquisition costs, inflation, and interest rates hindering the ability of families to accumulate a down payment or qualify for a mortgage. The company mentioned that strong employment often goes hand-in-hand with a strong housing market and expected broad-based demand to resume as rates stabilize or moderate.
Regarding tariffs and immigration, Lennar stated that it had taken steps in the past several years to move supply into the United States, which would reduce its exposure to the effect of increased tariffs. The company expressed confidence in its ability to work with local trades and national manufacturers to find effective solutions due to its Builder of Choice position with consistent high volume and a focus on production efficiencies.
Lennar emphasized its operating strategy, including focusing on matching production with sales pace and migrating to a land-light model where land is purchased on a just-in-time basis. The company also mentioned its plan to spin off Millrose Properties, Inc., to complete its land-light strategy.
Looking ahead, Lennar expressed its commitment to driving production to meet the housing shortage across its markets. The company also highlighted its strong balance sheet, growing national footprint, increasing community count, and higher volume as factors that afford it flexibility and opportunity for thoughtful growth in the future.
In terms of financial performance, Lennar reported net earnings attributable to Lennar of $3.9 billion, or $14.31 per diluted and basic share in 2024, compared to $3.9 billion, or $13.73 per diluted and basic share in 2023. Excluding certain one-time items, net earnings attributable to Lennar in 2024 were $3.8 billion, or $13.86 per diluted share, while in 2023, they were $4.1 billion or $14.25 per diluted share.
In 2024, Lennar's total revenues amounted to $35.4 billion, with sales of homes accounting for $33.8 billion. The company's gross margins on home sales were 22.3%, and its operating earnings from homebuilding operations reached $5.3 billion.
The company's homebuilding segments, including East, Central, Texas, West, and Other, contributed significantly to its financial and operational performance. Lennar reported higher revenues from home sales primarily due to an increase in the number of home deliveries, partially offset by a decrease in the average sales price of homes delivered. However, gross margins on home sales decreased primarily due to pricing to the market through increased use of incentives and product mix.
Lennar's Financial Services segment reported operating earnings of $574.2 million in 2024, compared to $507.1 million in 2023. The Multifamily segment also showed improvement, with operating earnings of $43.0 million in 2024, compared to an operating loss of $50.6 million in 2023. The Lennar Other segment reported an operating loss of $46.9 million in 2024, compared to an operating loss of $211.2 million in 2023.
The market has reacted to these announcements by moving the company's shares -1.3% to a price of $132.71. If you want to know more, read the company's complete 10-K report here.
