NEW YORK (Reuters) - Lennar Corp (LEN.N) posted a narrower-than-expected quarterly loss on Tuesday as the home builder reduced construction and administrative costs.
The No. 2 U.S. builder reported a loss of $89 million, or 56 cents per share, compared with a loss of $513.9 million, or $3.25 per share, a year ago.
Analysts had predicted a loss of 63 cents, according to Reuters Estimates.
Lennar’s revenue declined 53 percent to $1.11 billion in the quarter, just topping analyst estimates of $1.07 billion.
The U.S. housing market, mired in its worst slump since the Great Depression, continues to flail as subprime borrowers, who had been extended credit despite their high-risk profile, increasingly default on mortgages, pushing foreclosures and inventory up and prices down.
“While we expected the housing market to remain constrained throughout the third quarter, the weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards,” Stuart Miller, Lennar’s chief executive officer, said in a statement.
The Miami-based company’s average sales price decreased to $270,000 in the quarter from $296,000 last year.
As prices fall, builders must acknowledge the lower value of their holdings by taking charges. Lennar’s losses on land sales totaled $28.8 million, including $21.4 million in valuation adjustments and $10.9 million in write-offs related to sites the company does not intend to purchase.
U.S. builders have shifted into survival mode, trying to live through the downturn by selling their land, much of it bought at peak prices during the boom years, instead of building houses on it. Builders have scaled back so sharply that construction starts on new U.S. homes plummeted to a 17-1/2-year low during August, according to Commerce Department data.
Cash generation is king in this climate. Lennar ended the third quarter with about $857 million in cash and no outstanding borrowings under its credit facility.
Reporting by Helen Chernikoff and Euan Rocha, editing by Maureen Bavdek