Lennar Corp Saw Profits Fall in Its Latest Quarter. Is It Time To Buy the Dip on This Leading Homebuilder?

The housing market continues to face significant headwinds. Mortgage rates remain high, which is impacting affordability. Making matters worse, growing concerns about AI’s impact on jobs and the war in Iran are making potential buyers even more cautious.

These headwinds are affecting home sales. Leading homebuilder Lennar (LEN 1.09%)(LENB 0.73%) reported declining deliveries and profits in its fiscal first quarter. That has weighed on its stock price, which is down by more than a third from its 52-week high. Here’s a look at whether investors should buy the dip in the housing stock.

Image source: Getty Images.

The challenges continue

Lennar reported $229 million, or $0.93 per share, of net earnings in its fiscal 2026 first quarter. That’s down from $520 million, or $1.96 per share, in the year-ago period. Its deliveries declined 5% year over year to 16,863 homes as persistent headwinds weighed on demand. The company’s average selling price was $374,000 during the period, down from $408,000 in the year-ago period. Lennar has had to adjust prices and heavily incentivize buyers to maintain volume amid continued affordability issues. As a result, its net margin fell to 5.3%, down from 10.2% in the year-ago period.

Lennar’s strategy has been to actively design homes with affordability in mind rather than waiting out the challenging market conditions. Executive Chairman and Co-CEO Stuart Miller noted in the earnings press release, “We have focused on prioritizing volume to create durable scale advantages, delivering that volume at lower prices, and ultimately improving margins.”

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NYSE: LEN

Lennar

Today’s Change

(-1.09%) $-1.03

Current Price

$93.72

Key Data Points

Market Cap

$23B

Day’s Range

$92.18 - $94.29

52wk Range

$92.17 - $144.24

Volume

135

Avg Vol

2.9M

Gross Margin

17.07%

Dividend Yield

2.13%

The coming homebuilding boom

The housing market’s challenges will likely continue in the near term. The war with Iran has driven interest rates higher. Mortgage rates had finally fallen below 6% right before the war began. However, they’ve jumped back above that elevated level due to an uptick in U.S. Treasury bond rates, further impacting affordability. On top of that, headlines surrounding AI-related job losses are making potential home buyers even more cautious.

Despite the near-term headwinds, the long-term housing outlook hasn’t changed. “The fundamental shortage of housing in America has not been solved – demand is real, deferred, and building,” commented Miller. As affordability improves and rates fall, housing demand should grow. That should enable Lennar to ramp up its volume. It should generate even better profitability when that happens due to the efficiency gains it’s achieving every quarter by focusing on delivering more affordable homes.

I bought the dip

There’s no doubt the housing market remains extremely challenging. The industry’s headwinds could worsen in the near term if the war rages on and concerns grow about AI-related job losses. However, according to the U.S. Chamber of Commerce, the U.S. is facing a housing shortfall of more than 4.7 million homes, a big driver of the affordability gap. As builders like Lennar build affordable homes more efficiently and interest rates fall, demand should pick up. That drives my long-term conviction in Lennar stock, which is why I recently bought the dip. I think it’s a great way to capitalize on the eventual rebound in housing demand, especially at today’s lower share price.