S&P 500 component Lennar reports third-quarter earnings and revenue after the stock market close Thursday, with analysts expecting an slight acceleration in declining profit. However, investor focus remains on the future and on the hope that falling interest rates will revive housing demand.
Lennar Q3 earnings are forecast to fall 49% to $2.10 per share with revenue declining 5% to $8.97 billion, according to FactSet. Analysts also predict delivered home units to grow 4% to 22,414 with an average price of slightly more than $381,000 — down from $389,000 in the second quarter. For Lennar's part, the company expected, at the end of the second quarter, to deliver between 22,000 and 23,000 homes in Q3.
The S&P 500 housing stock advanced about 2% before the opening bell for Thursday's stock market. Shares ended Wednesday down 3.1% for the week, trading a fraction lower in September after three months of solid gains.
Homebuilder stocks reversed sharply lower from a brief rally Wednesday after the Federal Reserve cut rates and implied at least one, possibly two more cuts in 2025, all basically as expected. LEN stock has outpaced the market in the past two months as lower mortgage interest rates have revived hopes for housing demand.
For years now, homebuilders have said that housing affordability has been tested by interest rate movements. Many homebuilders, including Lennar, have turned to incentives to keep home prices down and drum up demand amid increased interest rates. However, with the Fed's decision to cut rates, more people could be willing to purchase homes without incentives. That suggests higher profit for Lennar and others.
S&P 500: Homebuilder Stocks To Watch
Overall, the 24 stocks in the IBD-tracked Building-Residential/Commercial industry group have collectively advanced just 1.6% in this year's stock market. Following, the Federal Reserve interest rate decision Wednesday, the industry group slipped about 0.8%.
Lennar stock appears to be working on a handle, but it is too low to be forming a deep cup-with-handle base, according to MarketSurge analysis. The S&P 500 stock could flash a buy signal if it rebounds from its 21-day exponential moving average.
Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks
Meanwhile, IPO stock Millrose Properties have found support above their 21-day exponential moving average. Millrose Properties could form a flat base with a 36 buy point if given another week. That entry matches its high from Aug. 28. Aggressive investors could plot early entries at 35.28 and 36.
The residential land developer completed its spinoff from Lennar in early February. Unlike typical homebuilders, Millrose specializes in the acquisition, preparation and sale of land to construction firms, who then build the homes.
Among other homebuilders, fellow S&P 500 component DR Horton edged up about 0.3% before Thursday's stock market open. DHI shares declined 1% Wednesday, after attempting a rebound off its 21-day line back into a cup-with-handle buy zone. The stock retreated out of the buy zone on Monday. DHI stock is up nearly 24% in the 2025 stock market.
PulteGroup, another stock on the S&P 500 index, is also trading near the bottom of a cup-with-handle buy zone, with a 133.67 entry for its base. The buy zone, which stretches 5% beyond the buy point, extends to 140.35. PHM shares edged up a fraction to 134.10 on Wednesday.
KB Home, like Lennar, has a too-low handle for a cup-with-handle-base, but could rebound from 21-day line. the stock fell 0.5% to 65.03 on Wednesday but signaled a move higher early Thursday.
Jump-Start Your Investing Skills With IBD Digital
Homebuilder Toll Brothers is retesting a cup-with-handle 140.86 buy point, and was on pace early Thursday to make a move above that level. Toll Brothers stock edged down 0.8% to 140.16 on Wednesday.
Investors can keep tabs on the IBD Leaderboard watchlist, the IBD 50 list of top growth stocks and IBD SwingTrader along with the IBD Sector Leaders list.
The S&P 500 component Lennar has a 46 Composite Rating out of a best-possible 99. Lennar also has a 51 Relative Strength Rating and a 46 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
YOU MAY ALSO LIKE:
Get Full Access To IBD Stock Lists And Ratings
Why This IBD Tool Simplifies The Search For Top Stocks
IBD Digital: Unlock IBD's Premium Lists, Tools And Analysis Today
How To Invest: Rules For When To Buy And Sell In Bull And Bear Markets
Market Awaits Rate Cut; Nvidia Falls On China Chip Ban Report
