Lennar Earnings: Order Growth Returns, Cancellations Normalizing, Delivery Guidance Raised

Lennar’s fiscal second-quarter financial results exceeded our expectations as the homebuilder’s pricing actions have been well received by the marketplace. These pricing actions caused the average selling price of new orders to decline 11% year over year (to $457,000), but in return, new order growth returned (0.5% growth after a 10% year-over-year decline last quarter), and the firm’s order cancellation rate is normalizing (13.5% during the second quarter compared with 21.5% last quarter and 26% during fourth-quarter 2022). Management is targeting 18,000-19,000 new orders during the third quarter, or 25%-32% year-over-year growth.