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Lennar Corporation (LEN): Company Profile, Stock Price, News, Rankings

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Lennar Corporation

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Welcome to Lennar's first quarter earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to David Collins for the reading of the forward-looking statement.

Thank you and good morning, everyone. Today's conference call may include forward-looking statements, including statements regarding Lennar's business, financial condition, results of operations, cash flows, strategies, and prospects. Forward-looking statements represent only Lennar's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could affect future results and may cause Lennar's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in our earnings release and our SEC filings, including those under the caption Risk Factors contained in Lennar's Annual Report on Form 10-K, most recently filed with the SEC. Please note that Lennar assumes no obligation to update any forward-looking statements.

I would now like to introduce your host, Mr. Stuart Miller, Executive Chairman. Sir, you may begin.

Okay, good morning, everybody, and thanks for joining us today. We're in Miami, and I'm here with Diane Bessette, our Chief Financial Officer. David Collins, who you just heard from, our Controller and Vice President. Katherine Martin, our Chief Legal Officer. Bruce Gross, CEO of Lennar Financial Services. Eric Feder here, President of LenX. We have today Jim Parker and David Grove, our Area Presidents, who are new to this program and who are now overseeing operations across the company. As you know, Jon Jaffe officially retired at the start of this year. While Jon's absence is deeply felt, the depth of experience and leadership on our team ensures that we're just not gonna miss a step. Jon, if you're listening, all is good, and we know you're listening. We hope that you're enjoying your time at the beach.

We're working hard, and I promise you that Jim and David are comfortable with everything in their day-to-day new positions except for the trauma embedded in today's conference call. But it really is the only thing that we didn't prepare them for. All right, so let's move on. As usual, today, I'm gonna give brief macro and strategic overview of the company. After my introductory remarks, you will hear briefly from Jim Parker and David Grove, who will give a brief operational overview. We hope you'll all get to know them over time, over the next quarters, as we are certain you will be quite impressed. Of course, after they speak, Diane is gonna give a detailed financial overview along with some limited guidance for the second quarter of 2026. Then, of course, we'll have our question and answer period as usual.

I'd like to ask that you please limit yourself to one question and one follow-up so that we can accommodate as many as possible. Let me begin. As we noted in our press release last night, we're pleased to review our first quarter 2026 results against the backdrop of what remains a stubbornly challenging housing market. Of course, recently, the challenges seem to have intensified given the volatility and uncertainty surrounding current events in the Middle East and the recent pullback of institutional purchasers as participants in the market. Nevertheless, even with additional hurdles, we believe that we are closer to an inflection point for Lennar than at any time in the past three years. In the first quarter, we remained focused on our clear and consistent strategies. We drove consistent volume, and we matched production and sales pace.

We used margin as a circuit breaker, and we continued to refine and improve our asset-light, land-light manufacturing platform. We have not pulled back and waited for the market to improve. We have maintained volume and focused on building improved business programs to bring costs down so that we can remain profitable and still provide needed housing supply. While in our first quarter, margin and our bottom line continued to reflect the affordability-driven realities of the current market, housing market, we also saw continuous improvement in all facets of our underlying cost structure that has set us on a course to stabilize and improve margins as we continue to produce volume and meet the market at affordability. Even with the current market challenges, we are feeling optimistic about our position in strategic markets and the progress made in reshaping our business for current conditions.

We are, in fact, actually adapting to market conditions as they are and not waiting for the market to bounce back. Let me briefly discuss the overall housing market from a macro standpoint. The macro economy continues to present a complex and, at times, unsettling backdrop for the housing market. Home prices remain high and have generally continued a pace of increase nationally that is generally higher than the pace of wage increases. Mortgage interest rates, which showed some early signs of easing towards the end of last year, have remained stubbornly over 6%, hovering around 6.2%-6.4% through most of our first quarter. With home prices plus interest rates at these levels, affordability remains the central challenge facing our buyers. Consumer confidence, while not collapsing, continues to be tested by a range of uncertainties, both domestic and global.

Additionally, and it goes without saying, that the war in the Middle East is a wild card. It might end quickly and the world is a better and safer place, or it might trigger higher gas prices, higher inflation, and higher interest rates, and we'll just have to wait and see. On the employment front, consumers who had previously felt secure in their jobs are now questioning that security as technology driven disruption, particularly the rapid advance of, and constant news coverage of artificial intelligence, raises important questions about the future of our workforce. This uncertainty layers onto already strained household budgets and has made consumers more hesitant to commit to large purchases, particularly homes. Traffic has remained reasonably consistent across our communities, but the urgency to transact remains measured.

At the same time, a combination of tariffs and immigration issues are keeping upward pressure on materials and labor costs, and are pushing overall costs higher. With affordability at stake, we have been working hard to push against and to manage these pressures through our trade partner relationships and through the efficiencies we have built into our manufacturing model and our product. Nevertheless, the cost structure in the industry is pushing higher and is difficult to manage. Additionally, since our earnings call, the federal government has made only one strategic move relative to housing. The institutional purchasers have been sidelined by political pressures and popular sentiment that suggest that they are part of the housing problem.

They have generally purchased somewhere between 5% and 7% of new homes in order to rent them to those who either can't afford to purchase, but want a single-family lifestyle, or those who prefer to rent. Ultimately, this movement will reduce demand in the market and signal to the industry to build less supply. On a more positive note, the federal government's engagement with the housing crisis continues to deepen. As I noted last quarter, federal officials have been actively engaged with the builders and industry associations to understand the affordability challenge and explore practical solutions. These specific programs remain to be finalized or to be seen, but the level of attention being paid at the federal level to the housing shortage is unprecedented, and we believe that meaningful policy support is more likely now than at any time in recent history.

Any program that effectively broadens access to affordable or attainable homeownership would be a significant tailwind for the industry and for Lennar specifically. Of course, additionally, the legislature is currently working on the 21st Century ROAD to Housing Act. Simply put, our best assessment of the bill is that it will not meaningfully impact housing or affordability in the short term. Perhaps over the longer term, with the right regulations written in its way, there will be some impact. In summary, the housing market remains caught in the tension between the underlying demand and constrained affordability. Supply is still critically short, and years of underproduction have created a structural deficit that will take years to close. The combination of high home prices, still high interest rates, constant cost pressure, and continuous consumer and cautious consumer sentiment has kept the market soft.

We believe the conditions are building for an eventual recovery. Against this backdrop, let me turn to Lennar's operating strategy. Our strategy is and has remained very clear. We are focused on three core tenets. One, operationally, driving consistent volume to maximize efficiency, both within our operations as well as in the way that we operate. Number two, financially, refining our asset-light, land-light balance sheet to generate strong and growing returns and cash flow. And three, technologically, engaging and incorporating new technologies to help advance our operational progress and to enhance our customer experience. To date, we have carefully defined and refined each of these tenets, both within the company, and we have kept you apprised of the strategy as well.

In 2026, we are bringing new levels of expectation and accountability to each of these areas and expect to drive definable results quarter by quarter in each of these areas. We are on a focused and determined march to drive costs down this year by using and enhancing each of these components. As I've said before, we are not nostalgically waiting for the market to reset in the way to the way things were. Instead, we're adjusting ourselves to the way things are, and we have made considerable progress. Progress can be seen in three distinct areas. First, we see real progress now in cost and efficiencies embedded in execution in our operating divisions.

You have and will continue to hear more about progress in our production and supply chain areas that are enabling us to become a low-cost provider, and you will hear more about this shortly from Jim and from David. Second, we are starting to see real traction in our technology initiatives that are creating efficiencies in the way that we operate and the speed at which we add additional efficiencies. As a company, we are actually getting good at these things, as we have already paid the dumb tax embedded in learning and unknown disciplines. We now have our operators working collaboratively with engineers to develop the products and product upgrades at speed, and we have built transmission lines through the company for execution across our platform in order to drive uniformity.

Additionally, we have brought into the company as associates an important, quote-unquote, "special services acquihire team of engineers and tech specialists" that are enabling us to accelerate. Over time, you will hear a lot more about our TigerEye associates and associated excellence initiative that celebrates best-in-class execution in our technology endeavors. This program will drive accelerated product development and dissemination. Currently, we are seeing important progress in our marketing and sales machine, and David will discuss internal progress shortly. Let me just note that alongside our TigerEye team and initiatives, our engagement with Opendoor and their leadership team continues to help us drive change at Lennar in both our product offerings, in our customer acquisition programs, and in improving our customer experience. We are also seeing progress in driving change in the manner in which we operate our extensive land bank administration.

Technology improvements have started to and will continue to reduce friction and improve option costs in this critical part of our business as transacting becomes more fluid and seamless. These improvements are already enabling us to transact with more counterparties and discover the best risk-adjusted cost provider for each unique land deal. We are seeing significant current cost improvement, but we are still at the very beginning. We believe this is a big area of opportunity for this year and for future cost reductions as the inefficiencies embedded in this area of financial transformation can be resolved with modern technologies. Third area, and we are in the early stages, is rightsizing our overhead as these changes will take a little bit of time to flow through our earnings.

Make no mistake, we have been working hard already on these changes. In past calls, I have noted that the technology migration is expensive and has inflated our overhead. We have carried additional associates, consultants, and various other costs as we've started the process of modernizing our 71-year-old company with new technologies. The process started two and a half years ago with our JDE ERP transition from World to E1. This transition is now complete, which enables our resources to be focused on driving our business forward. Our entire tech team is now being configured to build important parts of the future of Lennar. We have seen a new shot of energy in the Lennar technology group as we can deploy our best and brightest associates to focus on the most interesting company solutions.

At the same time, many of the resources that were needed to get started and move the program forward are no longer needed. Much of this cost was in the form of consulting and contract labor that can be readily reduced as needs subside, and these costs will be transitioned throughout 2026, this year, as those resources are being returned to industry. On the more corporate front, as Jon Jaffe retired at the beginning of the year, many of you have asked about leadership changes and if all is good at Lennar. Actually, Jon's retirement is a great example. In fact, a number of our longer-term Lennar associates have chosen to retire more recently and in the context of current market conditions.

Let me say first that any of our tenured associates who have made Lennar what it is today always have the absolute privilege to retire on their terms and on their time frame. With that said, each of them has led, trained, and nurtured future leaders who are themselves now tenured, ready to lead, and eager for the opportunity. Jon felt it was a good time to retire, and frankly, Jim and David were ready and anxious for their term at bat. They are tenured, they are proven Lennar professionals, and they are energized by the opportunity. It all makes sense. Jon retires. The next leaders are ready to take on new opportunity with fresh legs and new energy, and overhead is benefited at the same time. This is exactly how it's supposed to work, and it's working well here at Lennar.

New leadership is taking a fresh look at efficiencies as well, together with new technologies. SG&A will continue to shrink, and the bottom line is that our overhead costs are coming down meaningfully throughout 2026. Now let's turn to our first quarter 2026 operating results in more detail. We continued in the first quarter to focus on volume and match our production pace with our sales pace. We started 17,425 homes and we sold 18,515 homes, staying closely in balance and keeping our inventory properly sized. While we ended the quarter with approximately three completed unsold homes per community, slightly above our target of two, we constructively entered the spring selling season with ready inventory.

As the quarter progresses and sales volume picks up, we expect to work that inventory back towards our target range. Our average sales price came in at $374,000, essentially flat to plan and down 8% from the prior year, a reflection of continued use of incentives to enable affordability and drive volume. Sales incentives on deliveries were 14.1%, roughly flat with Q4 of last year at 14.5%, and we are cautiously optimistic that incentive levels are beginning to stabilize. The new order incentive rate actually showed some early encouraging signs, notably below the 14.1% delivery incentive rate and we believe reflects improving demand dynamics, of course, with an asterisk around the evolving macroeconomic elements that we're seeing in the market.

As a result, our gross margin in the first quarter was 15.2%, reflecting improving discipline across construction, land, and overhead. Our SG&A came in at 9.8%, slightly above expectations. Net margin was 5.3%, producing net income of $229 million in EPS of $0.93. Our inventory turn improved to 2.5x, which is up from 1.7x a year ago, and our return on inventory was 17.4%. Our community count sat at 1,678 at quarter end, up 6% from a year ago, and this positions us well for the remainder of this year. We have additional communities opening as we go into the second quarter. On the asset light side, we continue to make strong progress.

Less than 5% of our land is on balance sheet, and our total Homebuilding inventory has been reduced from just under $20 billion two years ago to $10.5 billion today. Our land banking relationships with Millrose, Angelo Gordon, Domain, Hearthstone, Apollo, and others continue to function extremely well, providing just-in-time homesite delivery in support of our manufacturing model. We have an 86% land bank delivery rate this quarter, up from 52% in Q1 of last year, and this reflects both the maturation of those relationships and the volume consistency that makes us a valued partner to each of our counterparties. On the balance sheet, we ended the quarter with $2.1 billion in cash and a home building debt-to-capital ratio at 15.7%.

Our strong balance sheet continues to give us flexibility to both invest in growth and return capital to shareholders. In conclusion, let me say that while it has been another challenging quarter in a challenging housing market, it is another constructive quarter for Lennar. Our numbers are not yet where we'd like them to be, but the trajectory is just right. Costs are coming down. Volume is holding. Our asset-light platform is functioning extremely well. Our technology initiatives are beginning to yield real and measurable results. We are very well positioned with strong and growing national footprint, a community count that is 6% above last year, and a cost structure that is materially more efficient than it was two years ago. When mortgage rates normalize, we believe that pent-up demand will be activated quickly and our margin will recover rapidly.

We always keep in mind that normalized incentive levels run 4%-6% compared to the 14% we are carrying today. That gap is our opportunity, and we are building toward it deliberately and with confidence. Our balance sheet is strong, our land banking relationships are deep and productive, and our technology initiatives are positioning Lennar to be a materially different and better company in the years ahead. We are building not just for this market, but for the long term. We couldn't be prouder of the extraordinary associates across the company who have executed through one of the most challenging environments in the history of housing, doing hard things, building new capabilities, and never losing sight of our mission to provide affordable, high-quality homes to families across America. We are truly delivering the American dream.

With that, and for the first time, let me turn it over to Jim Parker.

Thanks, Stuart, and good morning, everyone. I am Jim Parker, and I'm Lennar's Area President for the Eastern half of the country. I came to Lennar about eight years ago through the CalAtlantic transaction and have been in the Homebuilding business for over 30 years. David Grove and I work together to drive performance across the Lennar platform, and you will hear from David right after me. Let me start by saying that I'm very enthusiastic about where we are as a company and the tremendous progress we've made over the past three and a half years. While the market has been difficult since interest rates spiked in 2022, we have had a clear and well-communicated plan at Lennar, and we have been coordinated in our execution.

The overall housing market has and continues to adjust to a combination of elevated prices in the wake of COVID and elevated interest rates, pressuring affordability and home buyer confidence across our geographies. Instead of waiting for the market to correct, we believe this was a new normal and began to adapt our business execution to provide the volume the market needs at the prices and incentives where the market can transact. We are focused on refining product, optimizing our Everything's Included packages, rebuilding margins, and using mortgage rate buy-downs to maintain or regain momentum. Through our first quarter, we've been seeing early signs of a more consistent demand environment. We will see how that holds up as the market adjusts to the new geopolitical turmoil.

Over the next three weeks, David and I will visit each of our divisions and conduct our quarterly operations reviews, which happen at the beginning of each quarter. This is always exciting as we walk through the market at a very local level. We get a direct view of how our leaders think, how they adapt to change, and how they represent Lennar in our markets. These sessions allow us to pair the macro environment with what's actually happening in the field, so our decisions remain grounded in reality. The reviews also give us the ability to discuss our strategies at work in real time. The ongoing dialogue is collaborative, rewarding, and allows us to refine our approach continually, making sure that we stay aligned with the ever-changing conditions and needs of each market. These conversations aren't just about metrics. They're about people.

We get to see our talent in action and understand how each operator engages with landowners, developers, trade partners, and customers. Those relationships drive our ability to secure land, maintain cost discipline, and grow market share. After our people, land is our most vital asset, and we stay closely involved in shaping a disciplined, refreshed land strategy at every submarket, so we can grow community counts, reduce absorption pressure, and improve margins. We also take a close look at how we are resonating with customers through our local and national marketing and sales efforts, through intelligence tools like Rilla, which captures real-time feedback from buyer interactions, and through our dynamic pricing machine and Everything's Included platform. This collaborative approach ensures that we are aligning product, monthly payment, and value in a way that meets today's buyers' needs while allowing us to strategically reduce incentives and rebuild our margins.

This business approach and local focus have allowed Lennar's market position to remain exceptionally strong. We are the number one builder by market share in 22 of the top 50 Homebuilding markets and a top three builder in 42 of the top 50. That leadership reflects our volume-first, value-focused strategy and the strength of Lennar's operating machine. We ended Q1 with 1,678 active communities, up 6% year-over-year. With that growth, we continue to right-price our communities and lessen our incentives. At the end of the day, we run this business hands-on and as one Lennar. When we stay close to our operators, close to our customers, and aligned around land, product, and execution, we create consistency across the company.

I'm proud of the discipline and momentum our teams are building, and we look forward to carrying that into the rest of the year. With that, I'll turn it over to David.

Thanks, Jim. Good morning, everyone. I'm David Grove. I'm the Area President for the West. Nice to be with you today. As Stuart said, we remain extremely focused on capitalizing on our strategy of asset light and even flow production to fuel operational efficiencies and consistent growth. The execution of our strategy it is resulting in exactly the outcome we expected. While we have certainly impacted our margin, we are also realizing lower costs, improved cycle time, and continue to buy well-structured land at rationalized prices, all while continuing to drive efficiencies in our operations. Let me start with our cost saving and cycle time improvements. Our technology-driven bid tool software, coupled with our even flow starts and Everything's Included strategy, has allowed us to consistently realize cost savings quarter over quarter.

We have lowered our direct costs 12 of 13 quarters sequentially, and we are down 12% over the last two years. Our directs are now below pre-COVID levels. In Q1, we achieved just over a 2.5% reduction in direct construction costs from Q4, which represents a 7% year-over-year reduction. Our cycle time on single-family detached homes was down another five days quarter-over-quarter to 122 days. This is an 11% year-over-year reduction and an all-time low for Lennar. On the land front, we continue to capitalize on strong relationships with developers and land sellers to fill our land pipeline. Our consistent strategy and creative problem-solving has given us the ability to negotiate both land pricing and terms that will position us for stronger margins and allow us to maintain our land light strategy.

These operational improvements increased our inventory turn by 47% from prior year to 2.5. Turning briefly to our marketing and sales machine, which through constant refinement, continues to mature and facilitates our ability to execute our strategy and produce results even in the face of a tough market. In the first quarter, we achieved a sales pace of 3.6 sales per community per month while carefully managing incentives on a home-by-home basis as we use technology to drive volume while preserving price. Our intense focus on optimizing digital spend and driving high-quality leads is continuously improving. In the first quarter, our qualified leads, which represent the highest intent buyers in our funnel, increased 10% year-over-year. Once a lead enters the funnel, speed of engagement becomes a critical metric.

Our average response time to customer inquiries improved to 35 seconds in Q1, a 12% improvement from prior quarter and a 71% improvement year-over-year. This responsiveness now extends around the clock, 24/7, with digital agents available at any hour. We also measure the quality of our engagement as another critical component. In Q1, we improved our quality scores by 7%, reflecting our continued investment in coaching and AI-assisted performance analysis. We are measuring and accounting for every aspect of our business in order to drive improvement. As a result of refined targeting, faster response time, and higher quality engagement, our digitally driven lead sales appointments set increased 11% from our prior quarter and 17% from Q1 2025, which helped support sales activities in a seasonally softer demand period. Our focus extends to predictive capabilities of our pricing machine as well.

Our pricing strategy focuses on daily evaluation of demand patterns, inventory levels, and pricing discovery data designed to set the price and incentives for each home in each community to optimize margin while maintaining a targeted sales pace. This maximizes sales efficiency and maintains appropriate inventory levels. As Stuart mentioned, we ended our first quarter with  completed unsold homes per community. In conclusion, our team is focused on executing our strategies that drive improving customer acquisition rates, reduced direct costs, and enhanced operational efficiencies. These efforts, among others, are delivering measurable results and position us for future success.

Before you go forward, Diane, great job, guys. David, how many years have you been with the company?

27. Just wanna make sure that everybody understands. Jim, you got 30 years in the industry, and eight years here at Lennar.

From the CalAtlantic program. David, 27 years right here at Lennar.

Okay. Good morning, everyone. Stuart, Jim, and David have provided a great deal of color regarding our operating performance, therefore, I'm going to spend a few minutes on the results of our Financial Services operations, summarize balance sheet highlights, and then provide estimates for the second quarter. Starting with Financial Services. For the first quarter, our Financial Services team had operating earnings of $91 million. The lower earnings were mainly derived from our mortgage business. The decrease was primarily based on the mix of buy-down programs offered to our home building divisions, including an increase in ARMs versus fixed rate mortgages, with ARMs generating significantly lower earnings. Now turning to the balance sheet. Note that this quarter, once again, we were highly focused on generating cash by pricing homes to meet affordability.

The result of these actions was that we ended the quarter with $2.1 billion of cash and total liquidity of $5.2 billion. We are well positioned as a land light manufacturing home builder. Our years supply of owned home sites was 0.1 years, and our home sites controlled percentage was 98%. This configuration significantly lowers our balance sheet risk, especially in challenging environments. We ended the quarter owning 11,000 home sites and controlling 486,000, for a total of 497,000 home sites. We believe this portfolio of primarily optioned home sites provides us with a strong competitive position to continue to grow market share in a capital-efficient way. Our inventory turn increased to 2.5x, with return on inventory of approximately 17%.

We maintain our focus on increasing asset turns, which will enable us to capture greater improvement in returns when margins normalize. During the quarter, we started approximately 17,400 homes and ended the quarter with approximately 38,600 homes in inventory. This includes about 5,000 completed unsold homes, which as we've noted, equates to about three homes per community. Turning to our debt position. Homebuilding debt to total capital was 15.7% at quarter end. We ended the quarter with $1.7 billion outstanding under our term loan and no outstanding borrowings under our revolving credit facility. Our next debt maturity of $400 million is due in June. Consistent with our commitment to increasing total shareholder returns, we repurchased 2 million shares for $237 million, and we paid dividends totaling $123 million.

Our stockholders' equity was approximately $22 billion, and our book value per share was approximately $89. In summary, the strength of our balance sheet provides us with confidence and financial flexibility as we progress through 2026. With that brief overview, I'd like to turn to the second quarter and provide some guidance estimates. Starting with new orders. We expect Q2 new orders to be in the range of 21,000-22,000 homes, with continued focus on matching starts and sales paces. We anticipate our Q2 deliveries to be in the range of 20,000-21,000 as we maintain even flow production and turn inventory into cash.

Our Q2 average sales price on those deliveries should be between $370,000 and $375,000, and gross margins should be in the range of 15.5%-16%. As we focus on maintaining volume, we continue to price to market. That said, we believe our Q1 margin of 15.2% should represent the low point for the year. Our SG&A percentage should be in the range of 8.9%-9.1%, but of course, all of these metrics are dependent on how market conditions unfold. For the combined home building joint venture, land sales, and other categories, we expect a loss of approximately $20 million. We anticipate our Financial Services earnings to be between $100 million and $110 million.

For our Multifamily business, we expect earnings of about $10 million. Turning to our other, we expect a loss of approximately $25 million, excluding the impact of any potential mark-to-market adjustments. Our Q2 corporate G&A should be about 1.9% of total revenue, and our foundation contribution will be based on $1,000 per home delivered. We expect our Q2 tax rate to be approximately 25.5%, and the weighted average share count should be approximately 243 million. On a combined basis, these estimates should produce an EPS range of approximately $1.10-$1.40 for the quarter. Finally, we continue to aim for a full-year delivery target of 85,000 homes for the full year. With that, turn it over to the operator.

Thank you. We will now begin the question-and-answer session of today's conference call. We ask that you limit your questions to one question and one follow-up question until all the questions have been answered. If you would like to ask a question, please unmute your phone, press star one and record your name clearly when prompted. If you need to withdraw your question, you may press star two. Again, that is star one to ask a question. Our first question comes from Alan Ratner from Zelman & Associates. Please go ahead.

Hey, good morning. Thanks for the detail, and David and Jim, nice job. Glad to have you on the call. You know, first question, obviously, I think top of mind, you know, on recent activity, I think you kind of phrased it well, Stuart, but I'm just curious with the move we've seen in rates here over the last couple of weeks. Obviously, you know, you kind of probably started the process of thinking about the guidance, you know, towards the end of your quarter in February when rates were 25 basis points below where they are today. You know, I'm curious, have you continued to see the ability to either stabilize or inch lower your incentives even over the last couple of weeks amidst this volatility?

B, you know, has the cost of rate buydowns gone up alongside the move in rates we've seen here, and how is that contemplated in the margin guide? Thank you.

The question is interesting, Alan, because it happens to be an interesting time to do an earnings call. There's enough brand-new volatility since the end of our quarter to call into question any number of things. I think that we try to give as much guidance as we saw through the quarter and not do too much to update that thinking or guidance, you know, kind of under the banner that one week in a row doesn't make a trend either to the positive or to the negative.

The benefit we had right now today is that immediately after this call, both Jim and David, as Jim carefully described, will be out in the field working with the divisions to see what the actual impact is, and think about what we do to either offset or lean into the things we're seeing in the field. As we sit today, you know, without doing too much to update, I don't think we have an update. We haven't seen significant movement either in traffic, or in the ability to sell. I'll let Jim and David weigh in on that in a second.

I just don't think that there's enough information to know whether this will be a short-term program or even if a long-term program, whether domestically it will be a net positive or a net negative. As we see things right now, we're not seeing significant movement in the market. It really has been pretty steady. Jim, you first?

No, I agree. Right now we haven't seen an impact, but it's early to tell. You know, we talked to our division presidents this morning, and they have not seen any change to date this week or the previous week. You know, we're confident, but we're being very cautious. Like Stuart said, we're making sure we stay really close to the local markets to make sure we stay in tune with that.

Yeah. We're generally, you know, this week seeing a similar demand pattern that we've seen in the prior couple, so no significant negative impact. I think generally speaking, that's positive in light of the state of the, you know, macroeconomics.

Lennar Corporation (LEN) Q1 2026 Earnings Call Transcript

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