America's Second Largest Homebuilder Sees House Prices Plunge
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Lennar, the second-largest homebuilder in the country, reported an 8.6 percent year-over-year drop in its average sale price in the second quarter of 2025, as the ongoing slump in the U.S. housing market continues to affect developers.
The average price of a new home built by Lennar was $389,000 between April and June, down from $426,000 during that same time frame a year earlier and $409,000 in the first quarter of 2025.
Why Are Lennar's Prices Down?
Lowering prices is often proving to be the best course of action for Lennar and other U.S. developers trying to off-load their properties at a time when demand remains weak across the country due to historically elevated mortgage rates and sky-high home prices.
Home prices were still rising year-over-year in May, according to Redfin data, despite dwindling sales and rising inventory. Last month, the median sale price of a typical U.S. home was $441,738, up by 1 percent from a year earlier, while home sales were down by 5.9 percent year-over-year and total listings were up by 13 percent.
During the same month, the national average 30-year fixed mortgage rate was 6.8 percent, still nearly three times higher than the lows reached during the pandemic homebuying frenzy.
New multi-family houses under construction on 28 March 2007, are seen in Pembrook Pines, Florida.
New multi-family houses under construction on 28 March 2007, are seen in Pembrook Pines, Florida.
ROBERT SULLIVAN/AFP via Getty Images
"We knew that we were initially going to have to bring down the price of homes that we build through incentives and mortgage rate buydowns to meet affordability and normalize the supply and demand balance," Stuart Miller, Lennar's executive chairman and co-CEO said in a statement, commenting on the latest quarterly report.
"We believe we have gotten ahead of these market realities and are building what will become a stronger, margin-driving platform by using volume to enable us to drive costs down across our platforms," he added.
Facing what is likely to be a continued softness in the housing market and stubbornly high mortgage rates, Miller said that Lennar will continue to adhere to its strategy "of driving starts, sales and closings in order to build long-term efficiencies in our business."
Looking ahead, he said, "there is little evidence to support expectations of materially lower interest rates in the near term. As a result, elevated interest rates have solidified as the new normal. The environment is about recognizing that short supply is keeping prices higher and that only lower prices enabled by lower cost structures will define affordability."
Is This Strategy Working for Lennar?
While price cuts and mortgage rate buydowns might entice reluctant buyers and keep the builder afloat in the long term, in the short term they are causing Lennar significant losses: home sales revenue for Lennar dropped by 7 percent in the second quarter of 2025 to $7.8 billion, mainly because of the nearly 9 percent price drop.
Home deliveries, however, increased by 2 percent year-over-year to 20,131, and new orders jumped by 6 percent to 22,601—showing that Lennar's strategy is in fact working for the U.S. homebuilder, which has maintained its sales pace despite the market's general cooldown.
Overall, Lennar's second quarter revenue, at $8.38 billion, beat Wall Street's expectations, estimated at $8.16 billion, and investors reacted by boosting the builder's shares, which rose 2.3 percent on Monday after the report came out.
"You can see that Lennar's deliveries are still quite strong, and they've gained market share by cutting prices," real estate analyst Nick Gerli, CEO and founder of Reventure App, wrote on X. "In 2025, they delivered 20,131 homes, which was a record for the company in the 2nd quarter. And about 59 percent above pre-pandemic levels."
But a trade-off is taking place, Gerli said. "Cut prices, maintain the order book, but lose some profitability," he wrote. "One thing I would caution Lennar management on, though, is that they could be doing some damage to their brand in the process," Gerli added.
"With these dramatic price reductions, they've essentially destroyed the equity of anyone who purchased in their communities in 2021/2022/2023. And have now made it impossible for this cohort of their customers to resell their homes at a profit."
So far, it does not appear that Lennar is facing any brand reputational damage from lowering its sales prices.
Newsweek contacted Lennar for comment by email on Wednesday morning.
What Does This Mean for U.S. Homebuyers?
Gerli said that Lennar is "showing the rest of the housing market what needs to happen" to pull buyers back from the sidelines and get them interested in purchasing properties.
"Cut prices, and play in a world where the effective mortgage rate is more like 5 percent instead of 7 percent, and the buyers will come back," Gerli wrote on X.
The big takeaway from Lennar's strategy and quarterly revenue data, Gerli said, is that "home prices dropping, and offering homebuyers value, is the way to win in the 2025 housing market," he wrote.
"We could finally be seeing housing market deflation," he said, with new homes getting cheaper for homebuyers.
"Prices are about 20 percent overvalued across the U.S. right now at large. And Lennar has bridged that gap by cutting the price of their product and offering below-market mortgage rates," Gerli said. "This is perhaps a preview of what will happen across the broader market in the next 12-24 months."
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