I don't think it came as a surprise to anyone that Lennar
After all, the homebuilders such as KB Homes
With that in mind, Lennar actually reported better numbers than most of its brethren, as revenues climbed 20% to $4.2 billion and orders dropped only 5% year over year, when typical drops have been seen in the 20%-50% range. The company has faced criticism from rivals over adopting a rather cash-focused strategy, reducing inventory via heavy use of incentives and discounts, as well as using "even flow" production management (where the company only builds a new home as it closes one out in inventory).
To this Fool, it makes sense if the market is declining. Why not get what you can for the product before it declines further? To do otherwise might be considered pure speculation on when the market may rebound after a long boom, and as we all know, one prominent homebuilder CEO's predictions are worth diddly squat.
Many market observers and presumably anxious value investors have been awaiting the fabled "bottom" in the housing market to scoop up the builders as a classic deep value/cyclical turnaround play. With numerous indicators from housing starts, to backlog and inventory levels, to interest rates and employment trends, the wealth of data available makes it tempting for the individual investor to try and predict the perfect bottom and ultimate purchasing opportunity. From my perspective, it's an impossible task and serves as a distraction from the real question that investors should be asking: What type of margin of safety can I obtain now from investing in select homebuilders?
It seems to me that some homebuilders such as MDC Holdings
Play house with further Foolishness:
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