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Miami-Based Builder Narrows Loss

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The Associated Press

Published: June 27, 2008

Homebuilder Lennar Corp. said Thursday that it managed to narrow its second-quarter loss, but Chief Executive Officer Stuart Miller gave a dour outlook for the industry, saying the housing market has yet to hit bottom and ruling out prospects of a recovery this year.

"The housing market has continued to deteriorate throughout the first half of 2008. We expect that this trend is going to continue for at least the remainder of the year," Miller told analysts in a conference call after the builder disclosed its financial report card.

Faced with the prospect of ongoing housing doldrums, Miller echoed the building industry's call for the federal government to step in to help break the cycle of rising foreclosures, stagnating home sales and skidding home prices.

"In this fix is the bright light that I see at the end of homebuilding's dark tunnel," he said.

For the three months that ended May 31, the Miami-based builder reported a loss of $120.9 million, or 76 cents per share. That compares with a loss of $244.2 million, or $1.55 per share, in the same period a year earlier.

The latest quarter included a 60 cents per share charge stemming from write-downs and write-offs related to land option deposits and other costs.

Revenue plunged 61 percent, to $1.1 billion, from $2.8 billion last year.

Analysts surveyed by Thomson Financial were expecting a loss of 55 cents per share on revenue of $1.09 billion. The earnings estimates typically exclude one-time items.

Lennar shares tumbled $1.23, or 8.4 percent, to $13.34 on Thursday.

Like other homebuilders, Lennar has been struggling to compete for buyers amid a glut of foreclosed properties and other unsold homes on the market.

Some good news came from the National Association of Realtors on Thursday. The trade association said sales of previously owned homes rose 2 percent last month to 4.99 million units. But prices continued to drop, driving down the median sales price to $208,600, a decline of 6.3 percent from May last year.

On Wednesday, the Commerce Department reported that sales of new, single-family homes slipped 2.5 percent in May to an annual rate of 512,000 units.

Housing prices, meanwhile, fell at the sharpest rates ever in April, according to data released this week by Standard & Poor's/Case-Shiller.

Despite sharp declines in home prices, Miller told analysts he doesn't think the housing market has sunk to its lowest point.

"Demand patterns are inconsistent and erratic, and we found that there is a constant flow, an increasing flow of foreclosures that are maintaining downward pressure on prices and appraisals," Miller said, adding that he sees foreclosed properties on the market as Lennar's "toughest competitor."

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