UPDATE: Lennar's Deeper Quarterly Loss Points To More Pain For Builders

By John Spence

BOSTON (Dow Jones) -- Lennar Corp.'s wider quarterly loss and a new promotion featuring rock-bottom interest rates to attract nervous buyers show that home builders are bracing for the tough times to continue through the rest of the year.

The Miami-based company (LEN) after Monday's closing bell reported a first-quarter loss of 98 cents a share, compared with a loss of 56 cents a share in the year-ago period. The latest quarter's results included charges of 35 cents a share related to valuation adjustments and other write-offs, and 36 cents for a non-cash deferred tax asset valuation allowance.

"The housing market continued its downward trend throughout our first quarter," said Stuart Miller, chief executive.

"Despite historically low interest rates and some indicators pointing toward market stabilization, low consumer confidence, increased unemployment and growing foreclosure rates negatively impacted new home sales in most of our markets," the Lennar CEO said in the earnings release.

The builder said total revenue for the three months ended Feb. 28 slipped to $593.1 million from $1.06 billion in the year-earlier quarter. Lennar delivered 40% fewer homes while new orders fell 28%.

The results "illustrate the challenges builders face even as the rate of housing decline slows from the sharp retrenchment brought on last quarter by sudden economic dislocation," wrote Deutsche Bank analyst Nishu Sood in a research note.

In a brutal housing market, builders are offering more incentives to get potential buyers off the sidelines. For example, Lennar recently began offering a 3.625% rate on certain 30-year fixed mortgages for qualified buyers.

Lennar shares are roughly even this year despite the volatility in builder stocks.

Last week, KB Home reported a narrower quarterly loss but warned it sees no meaningful improvement in market conditions for the remainder of this year.