Lennar Charts Aggressive Course for 2026 Amid Housing Affordability Squeeze
Homebuilding titan Lennar Corporation is making headlines not just for its latest financials, but for a bold strategic pivot that has Wall Street talking. The company’s recent performance shows a clear commitment to volume growth, even if it means sacrificing some margin in a housing market still grappling with significant affordability challenges.
The company wrapped up its fourth quarter of fiscal 2025 by delivering a mixed financial picture. Lennar reported an impressive total revenue of $9.4 billion, a figure that handily surpassed analyst expectations, driven by the delivery of 23,034 homes. However, the adjusted earnings per share (EPS) of $2.03 fell slightly short of consensus forecasts.
The standout story in the report wasn’t the top or bottom line, but the sheer volume of activity. New orders surged a healthy 18% year over year, indicating that demand for new homes remains strong. To capture that interest, Lennar has aggressively leaned into incentives, which now represent about 14% of a home’s value. This focus on getting buyers into homes, often by buying down their mortgage rates, pushed the average sales price (ASP) of a delivered home down to $386,000, a notable 10% decrease from the previous year.
The consequence of this “volume over margin” strategy is evident in the gross margin on home sales, which dropped to 17.0% for the quarter. Management is not shying away from this trade off. Their outlook for the first quarter of 2026 anticipates further margin compression, guiding for a gross margin in the 15% to 16% range, reflecting the continued need to address buyer affordability.
Looking at the bigger picture, Lennar has set an ambitious goal to deliver approximately 85,000 homes in 2026. This target shows the company’s confidence in its ability to navigate the complex market conditions and its ongoing mission to address the national housing shortage. For the first quarter of the new fiscal year, the company projects between 17,000 and 18,000 home deliveries, with an average sales price expected to hover between $365,000 and $375,000.
In addition to home sales, Lennar is also making strategic moves in the land department, continuing its shift toward an “asset light” model where it controls an overwhelming majority of its homesites through options rather than owning the land outright. The company also recently completed a transaction involving TPG Real Estate to recapitalize Quarterra, its multifamily arm, pointing to a diversified approach to the residential market.
As the company’s strategy takes shape, analyst opinions are a bit mixed, with price targets adjusted across the board, ranging from a low of $80 to a high of $137. Despite some downward revisions following the Q4 report, the stock itself experienced a recent upward trend in the new year, rising more than 8% amid broader market optimism and a focus on housing-related policy discussions. Lennar’s aggressive drive for volume, combined with its operational efficiency, positions it as a key player to watch as the housing market seeks a new equilibrium in 2026.
