Heavy Lennar Losses Deepen Americas Housing blues
America’s housing market suffered a triple blow yesterday as its biggest homebuilder unveiled a record loss, house sales hit a five-year low and price drops reached a six-year high.
Lennar reported its biggest quarterly loss in its 53-year history as it took an $848 million (£420 million) writedown and recorded a 44 per cent slump in third-quarter revenues, to a three-year low of $2.34 billion.
The charge left the group with a $513.9 million loss, down from a $206.6 million net profit a year earlier, far exceeding analysts’ forecasts. It involved the decline in the value of its properties and a write-off of deposits on 15,000 sites under option that Lennar has decided not to buy because of a dramatic decline in demand for housing.
Lennar is the latest company to be hit as the housing crisis spreads from a jump in defaults on high-risk, sub-prime mortgages to a widespread credit crunch. This has taken its toll on hedge funds, private equity firms, Wall Street and high street banks, shareholders and mortgage groups.
Lennar indicated yesterday that orders for new homes had fallen 48 per cent, to 5,804, in the three months to September. Its plight tallied with figures from the National Association of Realtors, which showed that the sale of previously owned � as opposed to newly built � homes fell to a five-year low in August. Sales of previously owned homes in the United States fell by 4.3 per cent to an annual rate of 5.5 million last month compared with July, and by 13 per cent compared with the year earlier.
Other data revealed that home prices in America’s 20 leading metropolitan areas fell the most in July since the S&P/Case-Shiller home price index began in 2001. Values dropped by 3.9 per cent in the year to August, compared with a 3.4 per cent slump in the 12 months to July.
The crisis has knocked consumer confidence, with figures from the International Council of Shopping Centers showing that US retail sales fell by 1 per cent last week from the previous seven days.