What happened

Lennar (NYSE:LEN) shareholders trounced the market last month as their stock gained 21% compared to an 8% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

Their wider performance has been negative, though, with shares underperforming the market over the past one-year, three-year, and five-year periods.

Inside a luxury kitchen.

Image source: Getty Images.

So what

The foundations for January's rally were set in December, when indexes dove on concerns of an economic slowdown. Fears about an impending downturn in the housing market caused Lennar's stock to fall 8%, in fact.

Thus, shares were primed for a rebound if the company could modestly outperform low expectations for its fiscal fourth quarter, which it did. When it reported earnings in early January, Lennar said home deliveries shot higher by 64% as higher average prices contributed to a 71% boost in revenue to $6.5 billion.

Now what

There were still plenty of signs of softening trends in the homebuilding market in Lennar's report. Sales promotions rose and growth slowed from the prior quarter, for example. Executive Chairman Stuart Miller predicted that these issues would be short-term in nature since the economic growth fundamentals, including unemployment levels and wage growth, remain strong. Investors will see over the next few quarters whether that bright outlook pans out and Lennar's sales growth rate rebounds.

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