Lennar profit drops 56% amid rates, Iran uncertainty

Lennar's management is working through the various challenges facing homebuilders: not just the Iran conflict, but also the antipathy against institution investor purchasers.

In its first fiscal quarter, which ended on Feb. 28, Lennar earned $229 million, less than half of the $520 million it made for the same period in 2025.

The most recent results include a mark-to-market gain of $15 million on technology investments. For the year ago quarter, it took a hit of $63 million.

"Our first quarter of fiscal year 2026 was defined by the same persistent headwinds that have challenged the housing market for over three years — high mortgage rates, constrained affordability, cautious consumer sentiment, and geopolitical uncertainty, especially now including the recent conflict in Iran," said Stuart Miller, executive chairman and CEO in the earnings press release.

He expanded on those remarks during the earnings call, adding that the challenges facing Lennar have intensified not just because of the uncertainty in the Middle East but also a result of the "recent pullback of institutional purchasers as participants in the market."

Noting mortgage rates remain above 6%, "with home prices plus interest rates at these levels, affordability remains the central challenge facing our buyers and consumer confidence, while not collapsing, continues to be tested by a range of uncertainties, both domestic and global."

The Iran conflict can end quickly with the world being a better and safer place. "Or it might trigger higher gas prices, higher inflation and higher interest rates, and we'll just have to wait and see," Miller continued.

Another macro factor which could affect Lennar is employment, as consumers who previously felt secure about their jobs are now concerned about their future as headlines about the growth of artificial intelligence replacing workers are constant, Miller said.

It has made consumers more hesitant to commit to making a large purchase like buying a home.

The earnings call was held the morning after the U.S. Senate passed the 21st Century ROAD to Housing Act, a move Miller lamented, giving his earlier comments about institutional investors moving to the sidelines.

"Simply put, our best assessment of the bill is that it will not meaningfully impact housing or affordability in the short-term," Miller said. "Perhaps over the longer term, with the right regulations written in place, there will be some impact."

Revenue from home sales fell 13% from a year ago to $6.3 billion from $7.2 billion, which the company attributed to an 8% drop in average sales price compounded by a 5% reduction in the number of homes delivered.

"While the broader market remains challenged in the near term, exacerbated by current events, we are continuing to operate with conviction and clarity," Miller said in the press release. "The fundamental shortage of housing in America has not been solved — demand is real, deferred, and building."

Its financial services segment, including its affiliated mortgage company, posted operating earnings of $91 million, compared with $143 million one year prior, primarily due to lower lock volume and lower profit per locked loan.

Diane Bessette, chief financial officer, attributed this to mortgage rate buy-downs offered in its builder division, as well as a shift towards adjustable rate mortgages with lower earnings from fixed rate loans in its production mix.

Lennar Other, which includes its investments, had an operating loss of $5 million, including those technology gains. Last year, the operating loss was $89 million.

Lennar became an investor in Title Resource Group following the acquisition of Doma. It held a 25% voting stake in that company through the deal which brought its title underwriter together with one of Doma's predecessor businesses.