Homebuilders, New Home Sales, Spillover

Lennar reports sixth-straight quarterly loss

  

From Bloomberg:

Lennar Corp., the second-largest U.S. homebuilder, reported its sixth straight quarterly loss as potential buyers struggled to get mortgages and rising foreclosures increased the supply of homes on the market.

The fiscal third-quarter net loss narrowed to $89 million, or 56 cents a share, from $513.9 million, or $3.25 a share, a year earlier, Miami-based Lennar said today in a statement. Revenue fell 53 percent to $1.1 billion.

“The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,” Chief Executive Officer Stuart Miller said in the statement.

Lennar was forced to cut prices and build fewer homes after foreclosures accelerated to the fastest pace in almost three decades in the second quarter. Restrictions on lending and declining home prices have led to the steepest housing decline since the Great Depression of the 1930s.

Lennar was projected to report a net loss of 60 cents a share for the three months ended Aug. 31, according to the average estimate of 12 analysts in a Bloomberg survey.

Miller, like other homebuilding executives, has offered incentives to lure buyers. The average price of a Lennar home in the quarter fell 9 percent to $270,000 from a year earlier and the company sold the most homes in Arizona, Colorado and Texas. The median U.S. new home price was $230,700 in July.

“The sentiment is still pretty darn bad,” Eric Landry, an analyst at Morningstar, said before the results were issued. “The headwinds are still numerous and stiff.”

“The weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards” - that, and there are still too many homes for sale on the market. Not to downplay the other factors, which are certainly affecting housing in their own rights, but ultimately the root cause is that there is simply too much inventory.

And no Federal bailout is going to do anything about that. Not unless the government starts buying individual properties and bulldozing them.

 

number six, originally uploaded by Tanel.

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