Lennar Corporation's profit collapsed by more than half in its fiscal third quarter, and the homebuilding giant cut its full-year outlook late Wednesday, delivering fresh evidence that the housing market is buckling under the weight of persistently high borrowing costs.

The Miami-based builder, the nation's second-largest by homes sold, reported net earnings of $283.9 million, or $1.19 per diluted share, down from nearly $591 million, or $2.29 per share, a year earlier. Revenue came in at $8.0 billion. New orders fell 9% year-over-year to 20,879 homes, while deliveries slipped 3% to 20,840, and the company's gross margin on home sales narrowed to 15.8% as it leaned on incentives worth roughly 12% of the purchase price just to keep buyers walking through the door.

Guidance slashed again

Lennar trimmed its full-year 2026 delivery target to 80,000-81,000 homes, down from the 82,000-83,000 range it had projected just a quarter earlier, according to the company's earnings release filed with the SEC. Average sales price fell to $372,000 as the builder prioritized volume over margin in a market where affordability has become the central obstacle for would-be buyers.

The results land against a brutal backdrop for the sector. Mortgage rates have stayed elevated for years now, and the pain arrived on the same day the Federal Reserve raised interest rates and signaled more hikes could follow, dashing hopes that relief for homebuyers was imminent. Lennar shares, which had already sunk to four-year lows heading into the report, fell roughly 3% in after-hours trading following the release.

"Our third quarter 2026 results reflect consistent focus on our operating strategy of maintaining volume and production while navigating a challenging economic environment," Executive Chairman Stuart Miller said in the earnings release.

Miller has repeatedly argued that America's underlying housing shortage remains structural even as short-term demand sags, insisting the company stays "deeply committed to building the homes America needs, at prices families can afford." But investors have grown skeptical of that framing after a string of guidance cuts throughout the year. Lennar is a long-time holding of Warren Buffett's Berkshire Hathaway, and the stock's slide has made it one of the more closely watched bets in the housing space this year.

Backlog stood at 16,857 homes worth $6.3 billion at quarter's end, giving the company some visibility into near-term revenue even as new order growth stalls. For the fourth quarter, Lennar guided to 22,000-23,000 deliveries and 19,500-20,500 new orders, with gross margin expected to hold roughly flat at 15.5%-16.0%.

The report reverberated beyond Lennar itself, reinforcing worries about the broader homebuilding sector and mortgage-dependent consumer spending heading into the final stretch of the year. With the Fed now leaning hawkish rather than toward the rate cuts builders had been counting on, analysts say the industry's incentive-heavy playbook may need to stretch even further before demand meaningfully recovers. Lennar's next earnings report, covering the fourth quarter, is expected in December.