Lennar Braces for Significant Housing Downturn in 2023; Lowers Prices to Spur Demand

On the onset of Lennar’s fiscal fourth-quarter earnings call, Lennar Executive Chairman Stuart Miller painted a pessimistic near-term view on United States residential construction, saying that the company expects housing starts to decline 25%-33% year over year in 2023 to approximately 1 million units. We were surprised by this assessment because it’s below industry estimates we’ve seen and it’s also lower than our below-consensus 2023 estimate of 1.275 million starts (or an 18% decline). However, Miller shares our belief that the housing correction will be relatively short-lived. Indeed, we expect a rebound to begin in 2024 as lower mortgage rates and home prices bring more buyers back into the market.