Lennar Corp., the third-largest U.S. home builder, reported a wider second-quarter loss Thursday as sales fell and the Miami company wrote down land it no longer plans to build on.
Stuart Miller, the company's chief executive officer, said the market is not recovering.
Lennar said its net loss for the three months that ended May 31 rose to $125.2 million, from $120.9 million a year earlier.
The per-share loss of 76 cents was unchanged and exceeded the median of 67 cents forecast by analysts in a Bloomberg survey.
Revenue dropped 21%, to $891.9 million.
Lennar reported 38 cents a share in expenses to abandon options on home sites it does not intend to purchase.
Lennar's orders and backlog of homes under contract but not yet sold rose from the previous quarter.
Still, "while we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry," Miller said in a press release.
"This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner," Miller said.
Lennar said deliveries of homes rose 47% and new orders rose 67% from the first quarter.
Second-quarter deliveries dropped 18%, to 3,149, from the year-earlier period, while orders slid 19%, to 3,564.
The average sales price fell 8%, to $251,000, and the company offered incentives of about $52,600 per home, versus $48,700 in the year-earlier quarter.
The second-quarter backlog fell 48% from the year-earlier period, to 2,062 homes.
Industrywide, home purchases unexpectedly fell in May as builder discounts failed to keep pace with the foreclosure-driven decline in existing house prices.
Sales dropped 0.6%, to an annual pace of 342,000, the Commerce Department said Wednesday.
Sales of existing homes climbed 2.4%, driven by a 17% drop in prices, the National Association of Realtors said June 23.
"The high inventory level in the existing home market will continue to create substantial headwinds" for home builders, analysts Anna Torma and Min Zhang of Soleil Securities Group Inc. wrote in a note to investors Wednesday. "We remain cautious on the builders and do not expect fundamentals to stabilize until late 2009," they wrote.
Soleil Securities nonetheless rates Lennar shares "buy."
Builders including Lennar are competing with a glut of repossessed homes up for sale.
Foreclosure filings, including default and auction notices as well as property seizures, climbed 18% in May from a year earlier, according to RealtyTrac Inc. of Irvine, Calif.
The number topped 300,000 for the third consecutive month, with an estimated one in every 398 homes in some stage of foreclosure. Additional U.S. home foreclosures will probably total 6.4 million by mid-2011, and inventories of foreclosed homes awaiting sale will probably peak in mid-2010 at about 2 million properties, JPMorgan Chase & Co. analysts led by John Sim wrote in a June 5 report.
"Home prices will continue to fall in many of Lennar's key housing markets, which will place pressure on the company's profit margins," Standard & Poor's Corp. credit analysts James Fielding and George Skoufis wrote in a June 17 report.
Lennar said it ended the quarter with $1.4 billion in home-building cash and no outstanding borrowing under the company's credit line.
