Lennar Narrows Loss But Misses Target

Lennar (LEN Quote - Cramer on LEN - Stock Picks) reported a second-quarter loss Thursday that was wider than expected, and the company said the homebuilding industry is likely to deteriorate further this year unless the U.S. government intervenes to help stimulate consumer demand for homes.

The homebuilder's quarterly loss totaled $121 million, or 76 cents a share, wider than the 55 cent per-share loss that analysts expected, according to Thomson Reuters. A year ago, Lennar reported a loss of $244 million, or $1.55 a share.

Lennar's revenue plunged 61% to $1.1 billion, just slightly higher than Wall Street expected.

In morning trading Thursday, Lennar shares were falling 72 cents, or 4.9%, to $13.85. Other builders were weak on the report. Ryland (RYL Quote - Cramer on RYL - Stock Picks), Pulte (PHM Quote - Cramer on PHM - Stock Picks) and Toll Brothers (TOL Quote - Cramer on TOL - Stock Picks) each were down more than 2.5%.

Lennar and other major homebuilders continue to have trouble managing costs at a time when their revenue bases are sharply deteriorating. Ongoing home price drops remain a huge impediment to the industry's return to profitability. Lennar's average selling price on closed homes fell 8% from a year ago.

New orders plummeted 45% from a year ago to 4,396 homes.

In a statement, Lennar CEO Stuart Miller sounded an alarm that the housing industry is ready for its next leg down.

"With the U.S. housing inventory growing in excess of absorption and limited credit availability, the prospect of further deterioration in the homebuilding industry will likely become reality absent Federal government action," Miller said. "To that end, we are hopeful that the Federal government will acknowledge the need for further reform and will institute programs designed to stabilize and facilitate the recovery of the housing market."

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