Lennar Corp. rendered its verdict on the spring home-selling season on Thursday, saying an expected sales rally in what is traditionally the peak period for home sales simply didn't happen.
The homebuilder's fiscal second-quarter home deliveries fell 8 percent from a year ago, while new home orders were flat. Its profit fell 65 percent against prior-year results that were buoyed by a big tax benefit.
The sales declines were not as bad as Wall Street had anticipated and less severe than what several other large builders have reported of late, but do little to counter the fact that housing has gotten off to a disappointing track this year.
On Thursday, the Commerce Department reported that sales of new homes in the U.S. fell 2.1 percent in May to a seasonally adjusted annual rate of 319,000 homes _ well below the 700,000 homes a year that economists say must be sold to sustain a healthy housing market.
The National Association of Home Builders, the industry's trade association, now projects sales of new homes will be down this year versus 2010, when sales sank to the lowest level on records going back nearly 50 years.
Still, Lennar CEO Stuart Miller said that while the spring home-selling season "simply did not materialize, it is beginning to feel like the worst days of the housing market are getting behind us."
The executive noted that customer traffic has continued to improve and that, in almost all of its divisions, there are strong pockets of activity.
Even so, Miller cautioned that a housing recovery isn't around the corner.
"Make no mistake, stabilization and recovery will continue to be a slow and rocky process as traffic and desire have not yet translated into strong actual sales," Miller said. "These are, though, the first signs that repair of the market is upon us."
The lackluster sales trends didn't keep Lennar from turning a profit for the fifth consecutive quarter.
Miller said he's confident the company is well-positioned for 2011 to be a profitable year.
Lennar's shares added 27 cents, or 1.5 percent, to $18.37 in afternoon trading.
Homebuilders got an assist last year from federal tax credits that spurred sales industry wide through the end of April of 2010, when the government incentive expired. The tax credits pulled demand forward, and sales tanked for much of the rest of the year.
This year, encouraged by improved U.S. job numbers this spring, homebuilders expected to see a more traditional sales burst. But while traffic has been up, it hasn't necessarily translated into sales as in previous years.
Potential buyers are plagued by high unemployment, strict lending standards and fears that home prices will plunge again.
How the new-home market fares is a key factor in the health of the U.S. economy, because each new home creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.
Lennar, which is based in Miami, said it earned $13.8 million, or 7 cents per share, for the three months ended May 31. That compares with $39.7 million, or 21 cents per share, a year ago.
The prior-year period included an income tax benefit of $11 million, or 6 cents per share.
Analysts expected earnings of 4 cents per share, according to analysts surveyed by FactSet.
Lennar's revenue fell 6 percent to $764.5 million from $814.5 million. That still topped Wall Street's $644 million forecast.
The company's Rialto Investments unit, which buys distressed real estate investments, saw its operating earnings climb to $9.8 million from $5.1 million.
Home deliveries slipped to 2,682 homes, while new orders totaled 3,204 homes. Analysts, on average, had expected Lennar to report a 2.8 percent decline in new home orders for the quarter and a drop of 19.3 percent in delivered homes, according to FactSet.
Lennar's backlog dipped 1 percent to 2,470 homes.
During the quarter, the average sales price of homes delivered rose 2 percent to $245,000 from $240,000 as sales incentives offered to homebuyers increased.
Lennar builds homes in 17 states and is one of the nation's largest builders of senior housing communities.