TAX NEWS - 2010

Home Builder Reverses Loss, but Cites End of a Tax Credit

MIAMI -- The Lennar Corporation, the home builder, reversed a year-earlier loss in its most recent quarter, but revenue in the period was hurt by the expiration of a federal tax credit for home buyers, the company said Thursday.

Low mortgage interest rates and home buyer tax credits helped support sales and home orders for Lennar and other builders this spring. But the tax credits ended in April, pulling sales that would normally have taken place in May or June ahead to March and April.

"During the second quarter, we continued to see a housing market that was trying to stabilize," the chief executive, Stuart A. Miller, said in a statement. "As expected, this stabilization process was impacted by the expiration of the federal home buyer tax credit at the end of April."

New orders of homes fell 10 percent from 2009, with the entire decline coming in May.

Lennar said net income totaled $39.7 million, or 21 cents a share, reversing a loss of $125.2 million, or 76 cents a share, a year earlier.

Results were helped by an income tax benefit of $11 million.

Revenue in the period, which ended May 31 and was the second quarter of Lennar's fiscal year, fell 9 percent, to $814.5 million from $891.9 million. Analysts polled by Thomson Reuters expected Lennar to break even on about $835.5 million in revenue.

The report came a day after the Commerce Department said sales of new homes collapsed in May, sinking 33 percent to the lowest level on record.

Mr. Miller said he expects housing demand to improve in the second half of the year.

"The tax credit expiration accelerated sales activity to the pre-May period and it may take a couple of months for demand to rebuild," Mr. Miller said. The federal tax credits amounted to $8,000 for first-time home buyers and up to $6,500 for current homeowners.