Lennar fiscal Q3 2026: EPS fell 48% to $1.19 on revenue down 8.7% to $8.0B as a lower average sales price ($372K) and higher land costs cut home-sales gross margin to 15.8%, new orders fell 9%, and the full-year delivery target was cut to 80,000-81,000 homes.
Revenue
$8.0B
-8.7% YoY
Net income
$284M
-52.0% YoY
Diluted EPS
$1.19
-48.0% YoY
Operating margin
4.8%
Lennar's profit halves as falling home prices and a swing in tech investments hit at once
Lennar, the second-largest US homebuilder, earned $284 million, or $1.19 per share, in its fiscal third quarter ended August 31, 2026. A year earlier it earned $591 million, or $2.29 per share. Total revenue fell 8.7% to $8.05 billion. The company kept its volume close to plan and delivered 20,840 homes. The damage came from price: the average home sold for $372,000, down from $383,000, while land cost more, so each sale kept less profit. On top of that, Lennar's technology investments lost $53 million in value this quarter after gaining $99 million a year ago, a $152 million swing before tax.
Management said plainly that the market "has deteriorated since our last earnings call." It also said the $1.19 EPS was "below expectations." Mortgage rates rose during the quarter, with the 30-year rate at about 6.8% at quarter end "and even higher since." Lennar cut its full-year delivery target for the second quarter running.
Source: Lennar's Q3 2026 earnings release (Form 8-K Exhibit 99.1, filed September 16, 2026). The full 10-Q has not been filed yet, so the detailed management commentary (MD&A) and full cash-flow statement are not available. Figures below come from the release's income statement, segment tables and balance sheet.
Key metrics
Metric
Q3 FY2026
Q3 FY2025
YoY Change
Total revenues
$8,046M
$8,810M
-8.7%
Revenue from home sales
$7,734M
$8,214M
-5.8%
Gross margin on home sales
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Pre-tax margin (earnings before tax ÷ total revenue)
4.8%
9.0%
-4.2 pts
Net earnings attributable to Lennar
$284M
$591M
-52.0%
Diluted EPS
$1.19
$2.29
-48.0%
Adjusted EPS (excl. tech mark-to-market and one-time items)
$1.23
$2.00
-38.5%
Homes delivered
20,840
21,584
-3.4%
Average sales price (delivered)
$372,000
$383,000
-2.9%
New orders (homes)
20,879
23,004
-9.2%
New orders ($ value)
$7,504M
$8,440M
-11.1%
Backlog (homes / $ value)
16,857 / $6,345M
16,953 / $6,648M
-0.6% / -4.6%
Active communities
1,713
1,664
+2.9%
Lennar does not report a consolidated operating income line, so pre-tax margin stands in for operating margin here. Adjusted figures are the company's own: $294M / $1.23 this year versus $516M / $2.00 a year ago.
Where the profit went
Pre-tax earnings fell by $404 million, from $791 million to $387 million. The segment tables show where that came from:
Pre-tax earnings component
Q3 FY2026
Q3 FY2025
Change
Homebuilding operating earnings
$502M
$760M
-$258M
Financial Services operating earnings
$130M
$178M
-$48M
Lennar Other (incl. tech investments)
-$84M
+$62M
-$146M
Multifamily
-$3M
-$16M
+$14M
Corporate G&A
-$138M
-$171M
+$34M
Charitable foundation contribution
-$21M
-$22M
+$1M
Earnings before income taxes
$387M
$791M
-$404M
Homebuilding accounts for about two-thirds of the drop. The swing in tech investments accounts for most of the rest. Three other things made the EPS decline smaller or larger than the pre-tax decline:
Buybacks cushioned EPS. The average share count fell 7.0% to 237.8 million, so EPS fell 48% while net income fell 52%. Lennar bought back 3 million shares for $256 million this quarter, at an average of $85.49.
The tax rate rose. The effective tax rate was 26.4%, up from 24.4%. The company attributes the increase "primarily" to its spin-off of Millrose Properties.
Tech investment gains and losses cancel out in the adjusted figures. Last year's $99 million gain on technology investments made Q3 2025 look better than the underlying business. This year's $53 million loss makes Q3 2026 look worse. On Lennar's adjusted basis, which strips these out, EPS fell 38.5%, not 48%. That is the fairer measure of how much the core business weakened.
Homebuilding: holding volume by giving up price
Revenue from home sales fell 6% to $7.7 billion. The release attributes this to "both a 3% decrease in the average sales price of homes and a 3% decrease in the number of home deliveries." It explains the price drop as "primarily due to continued weakness in the market."
Gross margin on home sales is the share of a home's sale price left after the cost of land and construction. It fell to 15.8% from 17.5%. The release says margins decreased "primarily due to lower revenue per square foot and higher land costs year over year, which were partially offset by a decrease in construction costs." Lennar is cutting the cost of building a home: construction cost per square foot fell 6% year over year and 14% since late 2023. It also set a record low build time of 116 days, down from 126 a year ago. But those savings did not make up for lower selling prices and more expensive land.
The price pressure mostly takes the form of incentives, meaning discounts, mortgage-rate buydowns and closing-cost help that lower the effective price. Incentives averaged about 12.0% of the sale price this quarter, down from 12.9% in fiscal Q2. In the Q2 release, management called 4% to 6% "normalized," so incentives are still roughly twice the normal level. Lennar also cut base prices "to sustain volume."
SG&A, the overhead and sales costs of running the business, rose to 9.2% of home sales from 8.2%. In dollars it grew 5.6% to $714 million while revenue fell. The release attributes this to "less leverage as a result of lower revenues and an increase in marketing and selling expenses." Put simply, Lennar is spending more to sell each home.
After SG&A, the net margin on home sales was 6.6%, down from about 9.3% a year ago (17.5% gross margin minus 8.2% SG&A).
Results by region were mixed:
Region
Deliveries Q3 FY26
Deliveries Q3 FY25
ASP Q3 FY26
ASP Q3 FY25
East (FL, NJ, PA)
5,017
4,905
$372K
$366K
Central
5,322
5,334
$365K
$379K
South Central (incl. Texas)
5,969
6,413
$230K
$235K
West (incl. CA, AZ, CO)
4,529
4,926
$571K
$599K
The West, Lennar's highest-priced region, delivered 8% fewer homes at a 5% lower price. Its delivery revenue fell 12% to $2.59 billion. That region drove most of the drop in the average price. The East was the only region where both deliveries and price rose.
Orders: the weakest part of the quarter
New orders are signed contracts for future deliveries, so they are the best early read on demand. They fell 9.2% to 20,879 homes, even though Lennar ran 2.9% more active communities (1,713). That means each community sold fewer homes: about 4.1 sales per community per month, down from about 4.6 a year ago. Orders also came in just below the 21,000 to 22,000 range Lennar guided to in June.
The average price on new orders was $359,000. That is below both the $372,000 average on homes delivered this quarter and the $367,000 on orders a year ago. Since today's orders become next quarter's deliveries, this points to more pressure on price. Orders fell in the East (-17%), South Central (-14%) and West (-9%), while Central rose 4% at a lower $343,000 average price.
Performance against Lennar's own guidance
In its June release, Lennar gave guidance for Q3. Actual results compare as follows:
Deliveries were the only line that landed in range. The Financial Services beat depends entirely on a one-time item. The release says the $39 million net gain came "primarily" from "a litigation accrual reversal resulting from a court judgment." Without it, segment earnings fell because of "lower profit per locked loan and lower lock volume in the mortgage business," meaning Lennar's mortgage arm wrote fewer loans and earned less on each.
Balance sheet: cash down, debt up
Homebuilding cash fell to $1.15 billion from $3.44 billion at fiscal year-end (November 30, 2025) and $1.41 billion a year ago.
Homebuilding debt rose to $4.30 billion from $3.52 billion a year ago. That includes $650 million drawn on the $3.1 billion revolving credit line, even after Lennar repaid $400 million of 5.25% notes in June. Debt-to-total-capital rose to 16.6% from 13.5%. Net of cash, it rose to 12.7% from 8.6%.
Finished homes and homes under construction rose to $10.67 billion from $8.82 billion at fiscal year-end, up 21%. Management says completed homes without a buyer fell to 1.8 per community from 2.1 last quarter, so this looks like homes under construction for Q4 deliveries rather than unsold stock. The cash-flow statement in the 10-Q will be needed to confirm that.
Deposits on land purchase options rose to $7.33 billion from $6.38 billion. This reflects Lennar's "land-light" model: it controls about 488,000 homesites but owns fewer than 2.5% of them outright. Instead it pays deposits to partners, including the spun-off Millrose, and buys lots when it needs them.
Leverage is still modest for a builder of Lennar's size. The trend matters more: Lennar is still buying back stock while earnings fall and it borrows on its credit line. Buybacks totaled $703 million in Q2 and Q3 alone, and treasury stock rose $993 million over the nine months.
Takeaway: Lennar is choosing to keep volume up and give up price. So far that has protected deliveries but not earnings. New orders fell 9% on 3% more communities, new-order prices ($359K) are below delivered prices ($372K), and missed guidance on price, gross margin and SG&A points to more pressure in the next few quarters. Lower construction costs have not kept up with lower selling prices and higher land costs.
Outlook
Management's Q4 FY2026 guidance (quarter ending November 30, 2026):
Item
Q4 guidance
Q3 actual
New orders
19,500 - 20,500
20,879
Deliveries
22,000 - 23,000
20,840
Average sales price
$370,000 - $380,000
$372,000
Gross margin on home sales
15.5% - 16.0%
15.8%
SG&A % of home sales
8.7% - 9.0%
9.2%
Financial Services earnings
$90M - $95M
$129M (~$90M ex one-time)
Lennar lowered its full-year delivery target to 80,000 to 81,000 homes, down from 82,000 to 83,000 in June. It delivered 58,222 homes in the first nine months, so the new target requires about 21,800 to 22,800 in Q4, in line with the Q4 guide. Nine-month results so far: revenue of $22.6 billion (-8.9%), net earnings of $818 million (-48.5%) and EPS of $3.36 versus $6.06.
Our read: Two parts of the guidance look optimistic.
Price. The guided $370,000 to $380,000 average price is at or above Q3's $372,000. But the order book says otherwise: new orders were priced at $359,000, and the backlog averages $376,000. Some Q4 deliveries will be homes sold and closed within the quarter at current prices. So the low end of the price range looks more likely than the high end.
Gross margin. Management guided to about 16% for Q3 and got 15.8%. It is now guiding to 15.5% to 16.0%, even though it says rates are "even higher" since quarter end. A 15.5% result, or lower, would not be surprising.
The SG&A target of 8.7% to 9.0% is more believable because Q4 volume is higher and fixed costs get spread over more homes. Still, Lennar missed a similar target this quarter.
Orders are guided down again, to 19,500 to 20,500. That suggests demand is still softening, and it limits delivery volume heading into fiscal 2027.
The cost progress is real. Cost per square foot is down 14% since late 2023, and build times keep falling. If mortgage rates come down and Lennar can bring incentives back toward the 4% to 6% it calls normal, those lower costs would add directly to margins. On the evidence in this release, that recovery has not started.