Lennar Gets Hammered

Updated from 10:31 a.m. EDT

Lennar (LEN) reported a steep third-quarter loss and said it plans to continue making sharp reductions in its workforce because of the dismal housing market.

Lennar lost $514 million, or $3.25 a share, for the third quarter ended Aug. 31, reversing the year-ago profit of $207 million, or $1.30 a share. Analysts expected a loss of 55 cents per share. Homebuilding revenue fell 44% from a year ago to $2.2 billion.

On a conference call, CEO Stuart Miller said the housing market got worse throughout the quarter. He told investors the recent interest rate cut by the Federal Reserve will begin the process of helping the market, but it "most certainly will not be a panacea for conditions as they exist."

The problem is that "supply and demand has continued to shift more rapidly than expected," he said.

In the last quarter's conference call, Miller said three things need to happen before the housing market gets better -- inventories of both new and existing homes need to stabilize and then be absorbed, mortgage markets need to settle and consumer confidence has to be restored.

However, none of these have yet occurred, he said.

The loss for the third quarter throws another wrench into the hopes of investors in the homebuilding sector. The news comes on the same day as the S&P/Case-Shiller Index showed home prices fell 3.9% in July from a year ago in the largest 20 U.S. cities.