Homebuilder Sector Falls on Lennar Loss

MIAMI (TheStreet) -- Lennar's(LEN Quote) positive outlook wasn't enough to make investors forget about the homebuilder's widening loss -- or to keep them from punishing the rest of the homebuilder sector.

Shares of the company tumbled 5.5% to $15.60 in morning trading, after Lennar said its loss grew to $171.6 million, or 97 cents a share, compared with a year-earlier loss of $89 million, or 56 cents a share. Analysts had expected a loss of 46 cents.

Lennar attributed the third-quarter loss to writedowns on valuations and a charge on deferred tax assets.

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Total revenue for the company tanked 35% to $720.7 million from $1.11 billion last year, while home sales alone fell off by 36%. Analysts were expecting the homebuilder to produce $774.4 million in sales.

Gross margins on home sales were reduced to 15.6% from 18% at the same time last year.

But the company said there were some bright spots: Lennar's cancellation rate fell to 19% from 27% in the same quarter a year ago, and the value of its backlog rose 19% from the previous quarter to $647 million .

New orders in the third quarter slipped 8% from the same period a year ago, the smallest decline since November 2006.

"The overall housing market continued its road back to recovery as more confident homebuyers took advantage of increased affordability," Stuart Miller, president and CEO, said in a statement.

While Lennar refrained from providing guidance, the company said that if the economy continues to improve -- a sizable caveat, to be sure -- it will return to profitability in fiscal 2010.

Regardless, the bigger loss still led the hombebuilder sector into the red, despite signs of recovery. KB Home(KBH Quote)fell 4% to $19.44, Toll Brothers(TOL Quote) dropped 3% to $21.50, Pulte Homes(PHM Quote) declined 3% to $12.35 and MDC(MDC Quote)slipped 2.5% to $36.75.

KB Home will release its quarterly results on Sept. 25.

-- Reported by Sung Moss in New York.

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