LEN · Earnings call · 2026Q3T · Full report

Gross Margin Drivers

LENNAR CORP /NEW/ · 2026-09-16 · Importance 37 · Surprise 32

Q3 gross margin was 15.8%, up from 15.6% in Q2 but below the approximately 16% outlook; net margin was 6.6%. Since 2023, revenue per square foot has fallen 13%, while construction cost per square foot has fallen 14%; construction cost was approximately $80 per square foot, down 6% year over year. Management attributed the remaining margin gap to land costs: land cost per homesite was up approximately 6%, and longer deal durations increased option maintenance fees.

Key facts

• Third-quarter gross margin improved sequentially to 15.8%, and sales incentives on deliveries were 12%.
• Third-quarter net margin was 6.6%.
• Third-quarter gross margin was 15.8%, up from 15.6% in the prior quarter and just below guidance of approximately 16%.
• Construction cost improved to approximately $80 per square foot, down 6% year over year and 14% from the fourth quarter of 2023.
• Lennar's revenue per square foot was down 13% from 2023, while construction cost per square foot was down 14% over the same period.