Lennar · 10-Q · Item 2 MD&A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included under Item 1 of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and accompanying notes included in our 2025 Form 10-K.

Outlook

Lennar's second quarter 2026 results represent strong operational execution against a macro backdrop that has grown more complicated throughout the quarter. T1While our margin remains under pressure as we continue to focus on bringing affordable housing to an affordability-constrained consumer base, underlying demand is real and growing and supply remains structurally short.

T2Mortgage interest rates remained stubbornly elevated in the mid-to-upper 6% range throughout the quarter, keeping affordability challenged for the majority of our buyers. Complicating the picture further, headline inflation rose to 4.2% year-over-year in May, the highest reading since early 2023, driven primarily by energy prices tied to supply disruptions from the Iran conflict. While core inflation decelerated on a monthly basis, higher energy costs impact every part of the American household budget and weigh on consumer confidence and the urgency to make major financial commitments. The Federal Reserve remains on hold, and near-term rate relief appears unlikely. T3Consumer psychology continues to be tested by concerns about long-term job security amid rapid advances in artificial intelligence. Traffic across our communities has been inconsistent; intent is high but urgency to close remains measured and deliberate rather than confident.

On an encouraging note, T4after three years of incentive levels that have been generally increasing, we saw a meaningful decline in our sales incentives on deliveries this quarter. While the overall market remains choppy and it is too early to declare a sustained trend, this may be a leading indicator of margin recovery. The federal government's engagement with the national housing crisis also continues to deepen, with housing affordability remaining a genuine focal point of both the administration and the legislature.

Our operating strategy has not changed. T5We remain focused on two strategic priorities: driving consistent, even-flow production and volume, and continuously refining our asset-light, land-light balance sheet model to generate strong and growing cash flow and returns. Using incentives, we price to market in order to maintain sales at a consistent level as the market adjusts. This has given us a competitive edge, and has enabled us to drive down construction costs per square foot and to reduce cycle time to a record low. T6Our land-light model enables us to be a significantly more efficient land buyer, land developer and land administrator at a meaningfully lower cost of capital.

We are not waiting for conditions to normalize, we are building and executing in the market as it exists today, and we are currently expecting sequential margin improvement to continue as the year progresses.

For the third quarter of 2026, we expect new orders to be in the range of 21,000 to 22,000 homes, with continued focus on matching starts and sales pace. We anticipate third quarter deliveries to be in the range of 20,500 to 21,500 homes as we maintain even-flow production and convert inventory to cash. Our average sales price on those deliveries is expected to be between $375,000 and $380,000. We expect gross margins to be approximately 16%, and our SG&A percentage should be in the range of 8.8% to 9.0%. T7For the full year, we are adjusting our annual delivery guidance to 82,000 to 83,000 homes, reflecting current pressures on interest rates and continued macro uncertainty.

After over three years of navigating a rather difficult and complicated housing market, we believe that we are well-positioned for market conditions as they unfold. In the current market, incentives are declining, margins are starting to improve, and our sales and marketing machines are generating stronger leads, faster engagement, and better conversion. Our position is strong in the vast majority of our markets, which gives us the scale and operational discipline to position ourselves for improvements in the market rather than waiting for conditions to improve on their own. We are building towards that with clarity, discipline, and confidence.

(1) Results of Operations

Overview

We historically have experienced, and expect to continue to experience, variability in quarterly results. Our results of operations for the three and six months ended May 31, 2026 are not necessarily indicative of the results to be expected for the full year. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second and third fiscal quarters and increased deliveries in the second half of our fiscal year. However, a variety of factors can alter seasonal patterns.

Our second quarter net earnings attributable to Lennar in 2026 were $304.8 million, or $1.24 per diluted share, compared to our second quarter net earnings attributable to Lennar in 2025 of $477.4 million, or $1.81 per diluted share. Excluding pretax mark-to-market losses of $23.3 million and $29.4 million on technology investments, respectively, our second quarter net earnings attributable to Lennar in 2026 were $322.1 million, or $1.31 per diluted share, compared to $499.5 million or $1.90 per diluted share in the second quarter of 2025.

Financial information relating to our operations was as follows:

(In thousands)

Homebuilding

Financial Services

Multifamily

Lennar Other

Corporate

Total

Revenues:

Sales of homes

$

—

—

—

—

Sales of land

—

—

—

—

Other revenues

—

Total revenues

—

Costs and expenses:

Costs of homes sold

—

—

—

—

Costs of land sold

—

—

—

—

Selling, general and administrative expenses

—

—

—

—

Other costs and expenses

—

—

Total costs and expenses

—

Equity in earnings from unconsolidated entities

—

—

Other income, net and other gains, net

—

—

Lennar Other losses from technology investments

—

—

—

—

Operating earnings (loss)

$

—

Corporate general and administrative expenses

—

—

—

—

Charitable foundation contribution

—

—

—

—

Earnings (loss) before income taxes

$

(In thousands)

Homebuilding

Financial Services

Multifamily

Lennar Other

Corporate

Total

Revenues:

Sales of homes

$

—

—

—

—

Sales of land

—

—

—

—

Other revenues

—

Total revenues

—

Costs and expenses:

Costs of homes sold

—

—

—

—

Costs of land sold

—

—

—

—

Selling, general and administrative expenses

—

—

—

—

Other costs and expenses

—

—

Total costs and expenses

—

Equity in earnings (losses) from unconsolidated entities

—

—

Other income, net and other gains, net

—

—

Lennar Other losses from technology investments

—

—

—

—

Operating earnings (loss)

$

—

Corporate general and administrative expenses

—

—

—

—

Charitable foundation contribution

—

—

—

—

Earnings (loss) before income taxes

$

(In thousands)

Homebuilding

Financial Services

Multifamily

Lennar Other

Corporate

Total

Revenues:

Sales of homes

$

—

—

—

—

Sales of land

—

—

—

—

Other revenues

—

Total revenues

—

Costs and expenses:

Costs of homes sold

—

—

—

—

Costs of land sold

—

—

—

—

Selling, general and administrative expenses

—

—

—

—

Other costs and expenses

—

—

Total costs and expenses

—

Equity in earnings from unconsolidated entities

—

—

Other income, net and other gains, net

—

—

Lennar Other losses from technology investments

—

—

—

—

Operating earnings (loss)

$

—

Corporate general and administrative expenses

—

—

—

—

Charitable foundation contribution

—

—

—

—

Earnings (loss) before income taxes

$

(In thousands)

Homebuilding

Financial Services

Multifamily

Lennar Other

Corporate

Total

Revenues:

Sales of homes

$

—

—

—

—

Sales of land

—

—

—

—

Other revenues

—

Total revenues

—

Homebuilding costs and expenses:

Costs of homes sold

—

—

—

—

Costs of land sold

—

—

—

—

Selling, general and administrative

—

—

—

—

Other costs and expenses

—

Total costs and expenses

—

Equity in earnings (losses) from unconsolidated entities

—

—

Other income (expense), net and other gains (losses), net

—

—

Lennar Other losses from technology investments

—

—

—

—

Operating earnings

—

Corporate general and administrative expenses

—

—

—

—

Charitable foundation contribution

—

—

—

—

Earnings (loss) before income taxes

$

Revenues from home sales decreased 2% in the second quarter of 2026 to $7.6 billion from $7.8 billion in the second quarter of 2025. Revenues were lower primarily due to a 5% decrease in the average sales price of homes delivered, partially offset by a 2% increase in the number of home deliveries. New home deliveries were 20,519 homes in the second quarter of 2026, compared to 20,131 homes in the second quarter of 2025. The average sales price of homes delivered was $371,000 in the second quarter of 2026, compared to $389,000 in the second quarter of 2025. The decrease in average sales price of homes delivered in the second quarter of 2026 compared to the same period last year was primarily due to continued weakness in the market.

Gross margins on home sales were $1.2 billion, or 15.6%, in the second quarter of 2026, compared to $1.4 billion, or 17.8%, in the second quarter of 2025. During the second quarter of 2026, gross margins decreased primarily due to lower revenue per square foot and higher land costs year over year, which were partially offset by a decrease in construction costs, reflecting our continued focus on cost-saving initiatives.

Selling, general and administrative expenses were $698.4 million in the second quarter of 2026, compared to $688.8 million in the second quarter of 2025. As a percentage of revenues from home sales, selling, general and administrative expenses increased to 9.2% in the second quarter of 2026, from 8.8% in the second quarter of 2025, primarily due to less leverage as a result of lower revenues and an increase in marketing and selling expenses.

During the second quarter of 2026, our homebuilding operating earnings included $9.4 million of interest income, compared to $13.8 million of interest income in the second quarter of 2025. The decrease in interest income was primarily due to lower cash balances year over year.

Operating earnings for the Financial Services segment were $100.2 million in the second quarter of 2026, compared to $156.6 million in the second quarter of 2025, both amounts are net of noncontrolling interest. The decrease in operating earnings was primarily due to lower profit per locked loan in the mortgage business.

Operating earnings for the Multifamily segment were $18.3 million in the second quarter of 2026, compared to an operating loss of $14.8 million in the second quarter of 2025. Operating loss for the Lennar Other segment was $38.9 million in the second quarter of 2026, compared to an operating loss of $52.9 million in the second quarter of 2025. The Lennar Other

operating loss for both second quarters of 2026 and 2025 was primarily driven by mark-to-market losses of $23.3 million and $29.4 million, respectively, on our technology investments.

In the second quarter of 2026 and 2025, we had tax provisions of $105.1 million and $160.1 million, which resulted in an overall effective income tax rate of 25.6% and 25.1%, respectively. For both periods, our effective income tax rate included state income tax expense and non-deductible executive compensation, partially offset by tax credits.

Revenues from home sales decreased 8% in the six months ended May 31, 2026 to $13.9 billion from $15.0 billion in the six months ended May 31, 2025. Revenues were lower primarily due to a 6% decrease in the average sales price of homes delivered and a 2% decrease in the number of home deliveries. New home deliveries were 37,382 homes in the six months ended May 31, 2026, compared to 37,965 homes in the six months ended May 31, 2025. The average sales price of homes delivered was $373,000 in the six months ended May 31, 2026, compared to $398,000 in the six months ended May 31, 2025. The decrease in average sales price of homes delivered in the six months ended May 31, 2026 compared to the same period last year was primarily due to continued weakness in the market.

Gross margins on home sales were $2.1 billion, or 15.4%, in the six months ended May 31, 2026, compared to $2.7 billion, or 18.2%, in the six months ended May 31, 2025. During the six months ended May 31, 2026, gross margins decreased primarily due to lower revenue per square foot and higher land costs year over year, which were partially offset by a decrease in construction costs, reflecting our continued focus on cost-saving initiatives.

Selling, general and administrative expenses were $1.3 billion in the six months ended May 31, 2026, consistent with $1.3 billion in the six months ended May 31, 2025. As a percentage of revenues from home sales, selling, general and administrative expenses increased to 9.5% in the six months ended May 31, 2026, from 8.7% in the six months ended May 31, 2025, primarily due to less leverage as a result of lower revenues and an increase in marketing and selling expenses.

During the six months ended May 31, 2026, our homebuilding operating earnings included $29.3 million of interest income, compared to $37.0 million of interest income in the six months ended May 31, 2025. The decrease in interest income was primarily due to lower cash balances year over year.

Operating earnings for the Financial Services segment were $190.8 million in the six months ended May 31, 2026, compared to $299.5 million in the six months ended May 31, 2025, both amounts are net of noncontrolling interest. The decrease in operating earnings was primarily due to lower profit per locked loan in the mortgage business.

Operating earnings for the Multifamily segment were $36.2 million in the six months ended May 31, 2026, compared to an operating loss of $14.5 million in the six months ended May 31, 2025. Operating loss for the Lennar Other segment was $44.2 million in the six months ended May 31, 2026, compared to an operating loss of $142.2 million in the six months ended May 31, 2025. The Lennar Other operating loss for the six months ended May 31, 2026 was due to operating losses and mark-to-market losses of $8.4 million on our technology investments. The Lennar Other operating loss for the six months ended May 31, 2025 was primarily due to mark-to-market losses of $91.9 million on our technology investments.

In the six months ended May 31, 2026 and 2025, we had tax provisions of $174.2 million and $329.6 million, which resulted in an overall effective income tax rate of 24.6% and 24.8%, respectively. For both periods, our effective income tax rate included state income tax expense and non-deductible executive compensation, partially offset by tax credits.

Homebuilding Segments

At May 31, 2026, our reportable Homebuilding segments and Homebuilding Other are outlined in Note 2 of the Notes to Condensed Consolidated Financial Statements. The following tables set forth selected financial and operational information related to our homebuilding operations for the periods indicated:

Selected Financial and Operational Data

Gross Margins

Operating Earnings

($ in thousands)

Sales of Homes Revenue

Costs of Sales of Homes

Gross Margin (Loss) %

Net Margins (Losses) on Sales of Homes (1)

Gross Margins (Losses) on Sales of Land

Other Revenues

Equity in Earnings (Losses) from Unconsolidated Entities

Other Income (Expense), net

Operating Earnings (Losses)

East

$

%

Central

%

South Central

%

West

%

Other (2)

%

—

Totals

$

%

Gross Margins

Operating Earnings

($ in thousands)

Sales of Homes Revenue

Costs of Sales of Homes

Gross Margin (Loss) %

Net Margins (Losses) on Sales of Homes (1)

Gross Margins (Losses) on Sales of Land

Other Revenues

Equity in Earnings (Losses) from Unconsolidated Entities

Other Income (Expense), net

Operating Earnings

East

$

%

Central

%

(1)

South Central

%

(6)

West

%

Other (2)

%

—

Totals

$

%

Gross Margins

Operating Earnings

($ in thousands)

Sales of Homes Revenue

Costs of Sales of Homes

Gross Margin (Loss) %

Net Margins (Losses) on Sales of Homes (1)

Gross Losses on Sales of Land

Other Revenues

Equity in Earnings (Losses) from Unconsolidated Entities

Other Income (Expense), net

Operating Earnings

East

$

%

Central

%

South Central

%

West

%

Other (2)

%

—

Totals

$

%

Gross Margins

Operating Earnings

($ in thousands)

Sales of Homes Revenue

Costs of Sales of Homes

Gross Margin (Loss) %

Net Margins (Losses) on Sales of Homes (1)

Gross Margins (Losses) on Sales of Land

Other Revenues

Equity in Earnings (Losses) from Unconsolidated Entities

Other Income (Expense), net

Operating Earnings

East

$

%

Central

%

(4)

South Central

%

(8)

West

%

Other (2)

%

—

Totals

$

%

(1)Net margins on sales of homes include selling, general and administrative expenses.

(2)Negative gross and net margins were due to period costs in Urban divisions that impact costs of homes sold without sufficient sales of homes revenue to offset those costs.

Summary of Homebuilding Data

Deliveries:

Three Months Ended May 31,

Homes

Dollar Value (In thousands)

Average Sales Price

East

$

$

Central

South Central

West

Other

3

8

Total

$

$

Of the total homes delivered listed above, 73 homes with a dollar value of $47.9 million and an average sales price of $656,000 represent homes from unconsolidated entities for the three months ended May 31, 2026, compared to 113 homes with a dollar value of $51.1 million and an average sales price of $452,000 for the three months ended May 31, 2025.

Six Months Ended May 31,

Homes

Dollar Value (In thousands)

Average Sales Price

East

$

$

Central

South Central

West

Other

8

Total

$

$

Of the total homes delivered listed above, 157 homes with a dollar value of $119.7 million and an average sales price of $763,000 represent homes from unconsolidated entities for the six months ended May 31, 2026, compared to 193 homes with a dollar value of $92.0 million and an average sales price of $477,000 for the six months ended May 31, 2025.

Sales Incentives (1):

Three Months Ended May 31,

Six Months Ended May 31,

Average Sales Incentives Per

Home Delivered

Sales Incentives

as a % of Revenue

Average Sales Incentives Per

Home Delivered

Sales Incentives

as a % of Revenue

East

$

%

%

$

%

%

Central

%

%

%

%

South Central

%

%

%

%

West

%

%

%

%

Other

%

%

%

%

Total

$

%

%

$

%

%

(1) Sales incentives relate to homes delivered during the period, excluding homes delivered by unconsolidated entities.

New Orders (2):

Three Months Ended May 31,

Active Communities

Homes

Dollar Value (In thousands)

Average Sales Price

East

$

$

Central

South Central

West

Other

1

2

1

7

Total

$

$

Of the total new orders listed above, 57 homes with a dollar value of $30.9 million and an average sales price of $542,000 represent homes in five active communities from unconsolidated entities for the three months ended May 31, 2026, compared to 141 homes with a dollar value of $69.8 million and an average sales price of $495,000 in 10 active communities for the three months ended May 31, 2025.

Six Months Ended May 31,

Homes

Dollar Value (In thousands)

Average Sales Price

East

$

$

Central

South Central

West

Other

8

Total

$

$

Of the total new orders listed above, 128 homes with a dollar value of $62.1 million and an average sales price of $485,000 represent homes from unconsolidated entities for the six months ended May 31, 2026, compared to 242 homes with a dollar value of $129.7 million and an average sales price of $536,000 for the six months ended May 31, 2025.

(2)Homes represent the number of new sales contracts executed with homebuyers, net of cancellations, during the three and six months ended May 31, 2026 and 2025.

We experienced cancellation rates in our Homebuilding segments and Homebuilding Other as follows:

Three Months Ended

Six Months Ended

East

%

%

%

%

Central

%

%

%

%

South Central

%

%

%

%

West

%

%

%

%

Other

—

%

%

%

%

Total

%

%

%

%

Backlog:

Homes

Dollar Value (In thousands)

Average Sales Price

East

$

$

Central

South Central

West

Other

—

2

—

—

Total

$

$

Of the total homes in backlog listed above, 50 homes with a backlog dollar value of $28.4 million and an average sales price of $568,000 represent the backlog from unconsolidated entities at May 31, 2026, compared to 128 homes with a backlog dollar value of $101.4 million and an average sales price of $792,000 at May 31, 2025.

Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales contracts if they fail to qualify for financing or under certain other circumstances. Various state and federal laws and regulations may sometimes give purchasers a right to cancel contracts homes in backlog. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.

Homebuilding East: Revenues from home sales decreased in the second quarter of 2026 compared to the second quarter of 2025 primarily due to a decrease in the average sales price of homes delivered in all states of the segment, partially offset by an increase in the number of homes delivered in New Jersey. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives. The overall increase in the number of homes delivered was primarily due to an increase in the number of active communities. During the second quarter of 2026, gross margin percentage on homes delivered increased primarily due to a decrease in construction costs, partially offset by lower revenue per square foot and higher land costs year over year.

Homebuilding Central: Revenues from home sales decreased in the second quarter of 2026 compared to the second quarter of 2025 primarily due to a decrease in the average sales price of homes delivered in all states of the segment, except in Illinois, partially offset by an increase in the number of homes delivered in Alabama, Georgia, Illinois, and South Carolina. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives. The overall increase in the number of homes delivered was primarily due to an increase in the number of active communities. During the second quarter of 2026, gross margin percentage on homes delivered decreased primarily due to lower revenue per square foot and higher land costs year over year, partially offset by a decrease in construction costs.

Homebuilding South Central: Revenues from home sales decreased in the second quarter of 2026 compared to the second quarter of 2025 primarily due to decreases in the average sales price of homes delivered in Arkansas and Texas, partially offset by an increase in the number of homes delivered in all states of the segment. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives. The increase in the number of homes delivered was primarily due to an increase in the number of active communities. During the second quarter of 2026, gross margin percentage on homes delivered decreased slightly primarily due to lower revenue per square foot, partially offset by decreases in both construction costs and land costs year over year.

Homebuilding West: Revenues from home sales decreased in the second quarter of 2026 compared to the second quarter of 2025 primarily due to a decrease in the average sales price of homes delivered in California, Oregon and Washington, partially offset by an increase in the number of homes delivered in Arizona, California, Idaho, and Oregon. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives. The overall increase in the number of homes delivered was primarily due to an increase in the number of deliveries per active community. During the second quarter of 2026, gross margin percentage on homes delivered decreased primarily due to lower revenue per square foot and higher land costs year over year, partially offset by a decrease in construction costs.

Homebuilding East: Revenues from home sales decreased in the six months ended May 31, 2026 compared to the six months ended May 31, 2025 primarily due to decreases in both the number of homes delivered and the average sales price of homes delivered in all states of the segment, except for an increase in the number of homes delivered in New Jersey. The overall decrease in the number of homes delivered was primarily due to a decrease in the number of deliveries per active community. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives.

During the six months ended May 31, 2026, gross margin percentage on homes delivered decreased primarily due to lower revenue per square foot and higher land costs year over year, partially offset by a decrease in construction costs.

Homebuilding Central: Revenues from home sales decreased in the six months ended May 31, 2026 compared to the six months ended May 31, 2025 primarily due to decreases in both the average sales price of homes delivered and number of homes delivered in all states of the segment, except for an increase in the number of homes delivered in Alabama, Illinois and South Carolina. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives. The overall decrease in the number of homes delivered was primarily due to a decrease in the number of deliveries per active community.

During the six months ended May 31, 2026, gross margin percentage on homes delivered decreased, primarily due to lower revenue per square foot and higher land costs year over year partially offset by a decrease in construction costs.

Homebuilding South Central: Revenues from home sales decreased in the six months ended May 31, 2026 compared to the six months ended May 31, 2025 primarily due to a decrease in the average sales price of homes delivered in all states of the segment, except in Oklahoma, partially offset by an increase in the number of homes delivered in all states of the segment,

except in Texas. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives. The overall increase in the number of homes delivered was primarily due to an increase in the number of active communities. During the six months ended May 31, 2026, gross margin percentage on homes delivered decreased primarily due to lower revenue per square foot, partially offset by decreases in both construction costs and land costs year over year.

Homebuilding West: Revenues from home sales decreased in the six months ended May 31, 2026 compared to the six months ended May 31, 2025 primarily due to a decrease in the average sales price of homes delivered in Arizona, California, Utah and Washington and a decrease in the number of homes delivered in all states of the segment, except in Idaho and Oregon. The overall decrease in the average sales price of homes delivered was primarily due to pricing to market through an increased use of sales incentives. The overall decrease in the number of homes delivered was primarily due to a decrease in the number of deliveries per active community.

During the six months ended May 31, 2026, gross margin percentage on homes delivered decreased primarily due to lower revenue per square foot and higher land costs year over year, partially offset by a decrease in construction costs.

Financial Services Segment

Our Financial Services reportable segment provides mortgage financing, title and closing services primarily for buyers of our homes. The segment also originates and sells into securitizations commercial mortgage loans through its LMF Commercial business. Our Financial Services segment sells substantially all of the residential loans it originates within a short period in the secondary mortgage market, the majority of which are sold on a servicing-released, non-recourse basis. After the loans are sold, we retain potential liability for possible claims by purchasers that we breached certain limited industry-standard representations and warranties in the loan sale agreements.

The following table sets forth selected financial and operational information related to the residential mortgage and title activities of our Financial Services segment:

Three Months Ended

Six Months Ended

(Dollars in thousands)

Dollar value of mortgages originated

$

Number of mortgages originated

Mortgage capture rate of Lennar homebuyers

Number of title and closing service transactions

At May 31, 2026 and November 30, 2025, the carrying value of Financial Services' commercial mortgage-backed securities was $129.3 million and $132.9 million, respectively. Details of these securities and related debt are disclosed in Note 2 of the Notes to Condensed Consolidated Financial Statements.

Multifamily Segment

We have been actively involved, primarily through unconsolidated funds and joint ventures, in the development and construction of multifamily rental properties. Our Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.

The following table provides information related to our investment in the Multifamily segment:

Balance Sheets

At

(In thousands)

Multifamily investments in unconsolidated entities

$

Lennar's net investment in Multifamily

During the second half of fiscal 2024, the LMV I partners decided to liquidate and sell all of its 38 rental operation projects of LMV I as the fund has come to the end of its contractual life. During the year ended November 30, 2025, 35 LMV I rental operation projects were sold to various third-party buyers. During the six months ended May 31, 2026, one additional LMV I rental operation project was sold to a third-party buyer.

Lennar Other Segment

Our Lennar Other segment includes strategic investments in various types of technology and other companies that are looking to improve the homebuilding and financial services industries to better serve homebuyers and homeowners and increase efficiencies as well as fund investments we retained subsequent to our sale of the Rialto investment and asset management platform. At May 31, 2026 and November 30, 2025, we had $800.4 million and $897.6 million, respectively, of assets in our Lennar Other segment, which included investments in unconsolidated entities of $364.5 million and $368.0 million, respectively.

We have investments in publicly traded technology companies, which are held at market and the carrying value of which will therefore change depending on the value of our shareholdings in those entities on the last day of each quarter. All the investments are accounted for as investments in equity securities which are held at fair value and the changes in fair values are recognized through earnings as discussed in the Overview section earlier of our Management's Discussions and Analysis of Financial Condition and Results of Operations.

(2) Financial Condition and Capital Resources

At May 31, 2026, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $2.2 billion, compared to $3.8 billion at November 30, 2025 and $1.5 billion at May 31, 2025.

We finance all of our activities, including homebuilding, financial services, multifamily, other and general operating needs, primarily with cash generated from our operations, debt issuances and cash borrowed under our warehouse lines of credit and our unsecured revolving credit facility (the “Credit Facility”). At May 31, 2026, we had $1.8 billion of homebuilding cash and cash equivalents and ended the second quarter of 2026 with total liquidity of $4.9 billion.

Operating Cash Flow Activities

During the six months ended May 31, 2026 and 2025, cash used in operating activities totaled $718 million and $1.4 billion, respectively. During the six months ended May 31, 2026, cash used in operating activities was impacted by (1) an increase in inventories due to land purchases and construction costs of $1.1 billion; (2) an increase in deposits and pre-acquisition costs on real estate of $555 million primarily as a result of option contracts with land banks, which included option maintenance fees paid to land banks; and (3) a decrease in accounts payable and other liabilities of $272 million. This was partially offset by (1) our net earnings; (2) a decrease in loans held-for-sale of $247 million primarily related to the sale of loans originated by our Financial Services segment; and (3) a decrease in receivables of $129 million.

During the six months ended May 31, 2025, cash used in operating activities was impacted by an increase in inventories due to land purchases, land development and construction costs of $1.6 billion, an increase in deposits and pre-acquisition costs on real estate of $782 million as we increased the percentage of controlled homesites primarily as a result of option contracts with Millrose Properties, Inc. ("Millrose"), and a decrease in accounts payable and other liabilities of $600 million. This was partially offset by our net earnings and a decrease in loans held-for-sale of $361 million primarily related to the sale of loans originated by our Financial Services segment.

Investing Cash Flow Activities

During the six months ended May 31, 2026 and 2025, cash provided by investing activities totaled $77 million and $183 million, respectively. During the six months ended May 31, 2026, our cash provided by investing activities was primarily due to distributions of capital from unconsolidated entities of $134 million, which primarily included (1) $105 million from Multifamily entities, (2) $23 million from Homebuilding unconsolidated entities, and (3) $6 million from our Lennar Other unconsolidated entities. This was partially offset by cash contributions of $59 million to unconsolidated entities, which included (1) $30 million to Homebuilding unconsolidated entities, (2) $2 million to Lennar Other unconsolidated entities and (3) $27 million to Multifamily unconsolidated entities.

During the six months ended May 31, 2025, our cash provided by investing activities was primarily due to $233 million received from the sale of an investment in a joint venture, $72 million proceeds from the sale of investments and distributions of capital from unconsolidated entities of $175 million, which primarily included (1) $32 million from Homebuilding unconsolidated entities, (2) $129 million from Multifamily entities and (3) $15 million from our Lennar Other unconsolidated entities and $115 million proceeds from the sale of loan receivables. This was partially offset by the $254 million acquisition of Rausch Coleman Homes, net of cash acquired, and cash contributions of $145 million to unconsolidated entities, which included (1) $124 million to Homebuilding unconsolidated entities, (2) $7 million to Lennar Other unconsolidated entities and (3) $14 million to Multifamily unconsolidated entities and $71 million of net additions of operating properties and equipment.

Financing Cash Flow Activities

During the six months ended May 31, 2026 and 2025, cash used in financing activities totaled $1.0 billion and $2.3

billion, respectively. During the six months ended May 31, 2026, cash used in financing activities was primarily due to (1) $737 million of repurchases of our common stock, which included $691 million of repurchases under our repurchase program and $46 million of repurchases related to our equity compensation plan; (2) $247 million of dividend payments; and (3) $155 million of net payments from liabilities related to consolidated inventory not owned due to activity with land banks. This was partially offset by $173 million of net borrowings under our Financial Services' warehouse facilities.

During the six months ended May 31, 2025, cash used in financing activities was primarily due to (1) $515 million of net repayments under our Financial Services' warehouse facilities; (2) redemption of $500 million aggregate principal amount of our 4.75% senior notes due May 2025; (3) $416 million net cash in connection with the Millrose spin-off; (4) $386 million of net payments from liabilities related to consolidated inventory not owned due to activity with land banks; (5) $1.3 billion of repurchases of our common stock, which included $1.2 billion of repurchases under our repurchase program and $65 million of repurchases related to our equity compensation plan; and (6) $265 million of dividend payments.

The cash used in financing activities was partially offset by the receipt of proceeds of the sale of $700 million aggregate principal amount of our 5.20% senior notes due 2030 and $400 million of net borrowings under our unsecured revolving credit facility.

Debt to total capital ratios are financial measures commonly used in the homebuilding industry and are presented to assist in understanding the leverage of our homebuilding operations. Homebuilding debt to total capital and net Homebuilding debt to total capital are calculated as follows:

At

(Dollars in thousands)

Homebuilding debt

$

Stockholders’ equity

Total capital

$

Homebuilding debt to total capital

%

%

%

Homebuilding debt

$

Less: Homebuilding cash and cash equivalents

Net Homebuilding debt

$

Net Homebuilding debt to total capital (1)

%

%

%

(1)Net homebuilding debt to total capital is a non-GAAP financial measure defined as net homebuilding debt (homebuilding debt less homebuilding cash and cash equivalents) divided by total capital (net homebuilding debt plus stockholders' equity). We believe the ratio of net homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in homebuilding operations. However, because net homebuilding debt to total capital is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement our GAAP results.

At May 31, 2026, Homebuilding debt to total capital was consistent with November 30, 2025. At May 31, 2026, Homebuilding debt to total capital was higher compared to May 31, 2025, primarily as a result of a decrease in stockholders' equity due to the non-cash exchange of Millrose Class A common stock, stock repurchases, an increase in Homebuilding debt due to issuance of senior notes and outstanding borrowings under our unsecured delayed draw term loan facility (the "Delayed Draw Term Loan Facility"), partially offset by net earnings and debt paydowns.

We are continually exploring various types of transactions to manage our leverage and liquidity positions, take advantage of market opportunities and increase our revenues and earnings. These transactions may include the issuance of additional indebtedness, the repurchase of our outstanding indebtedness, the repurchase of our common stock, the acquisition of homebuilders and other companies, the purchase or sale of assets or lines of business, the issuance of common stock, strategic transactions to accelerate our land-light strategy or securities convertible into shares of common stock, and/or the pursuit of other financing alternatives. In connection with some of our non-homebuilding businesses, we are also considering other types of transactions such as sales, restructurings, and joint ventures as we continue to move towards being a pure play homebuilding company.

Our Homebuilding senior notes and other debts payable as well as letters of credit and surety bonds are summarized within Note 7 of the Notes to Condensed Consolidated Financial Statements. Our Homebuilding average debt outstanding and the average rates of interest was as follows:

Six Months Ended May 31,

(Dollars in thousands)

Homebuilding average debt outstanding

$

Average interest rate

Interest incurred

$

We have the Delayed Draw Term Loan Facility with committed borrowing availability of approximately $1.7 billion, which can be increased by an additional $500 million via an accordion feature. As of May 31, 2026, we had outstanding borrowings of $1.7 billion under the credit agreement governing its unsecured Delayed Draw Term Loan Facility. We may at any time prepay the loan, in whole or in part, without premium or penalty. The term loan’s maturity date is three years from the initial effectiveness date of the credit agreement or May 2028, and at our discretion, it can be extended for an additional year until May 2029, subject to the satisfaction of certain conditions. Under the Delayed Draw Term Loan Facility, interest rates equal the adjusted term SOFR determined for the interest period plus the applicable margin.

The maximum available borrowings on our Credit Facility were as follows:

(In thousands)

Commitments - maturing in May 2027

$

Commitments - maturing in November 2029

Total commitments

$

Accordion feature

Total maximum borrowings capacity

$

The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. The Credit Facility also provides that up to $477.5 million in commitments may be used for letters of credit. The maturity, debt covenants and details of the Credit Facility are unchanged from the disclosure in the Financial Condition and Capital Resources section in our 2025 Form 10-K. In addition to the Credit Facility, we have other letter of credit facilities with different financial institutions.

Under the agreements governing our Credit Facility and Delayed Draw Term Loan Facility, we are required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Facility and Delayed Draw Term Loan Facility agreements, which involve adjustments to GAAP financial measures. We believe we were in compliance with our debt covenants as of May 31, 2026. The following summarizes our debt covenant requirements and our actual levels or ratios with respect to those covenants as calculated per the Credit Facility and Delayed Draw Term Loan Facility agreements as of May 31, 2026:

(Dollars in thousands)

Covenant Level

Minimum net worth test

$

Maximum leverage ratio

Liquidity test

Financial Services Warehouse Facilities

Our Financial Services segment uses residential mortgage loan warehouse facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial warehouse facilities finance LMF Commercial loan origination and securitization activities and are secured by up to 80% interests in the originated commercial loans financed. These facilities and the related borrowings and collateral are detailed in Note 2 of the Notes to Condensed Consolidated Financial Statements.

Changes in Capital Structure

In January 2024, our Board of Directors authorized an increase to our stock repurchase program to enable us to repurchase up to an additional $5 billion in value of our outstanding Class A or Class B common stock. Repurchases are authorized to be made in open-market or private transactions. The repurchase authorization has no expiration date. At May 31, 2026, we have a remaining authorization to repurchase $1.0 billion in value of our Class A or Class B common stock. The details of our Class A and Class B common stock repurchases under the authorized repurchase program for the six months ended May 31, 2026 and 2025 are included in Note 4 of the Notes to Condensed Consolidated Financial Statements.

T8During the six months ended May 31, 2026, treasury shares increased by 7.6 million shares primarily due to our repurchase of 7.0 million shares of Class A and Class B common stock through our stock repurchase program. During the six months ended May 31, 2025, treasury shares increased by 10.6 million shares primarily due to our repurchase of 9.9 million shares of Class A and Class B common stock through our stock repurchase program.

On June 25, 2026, our Board of Directors declared a quarterly cash dividend of $0.50 per share on both our Class A and Class B common stock, payable on July 24, 2026 to holders of record at the close of business on July 10, 2026. On May 6, 2026, we paid a quarterly cash dividend of $0.50 per share for both of our Class A and Class B common stock to holders of record at the close of business on April 22, 2026. We approved and paid cash dividends of $0.50 per share for each of the four quarters of 2025 for both our Class A and Class B common stock.

Based on our current financial condition and credit relationships, we believe that our operations and borrowing resources will provide for our current and long-term capital requirements at our anticipated levels of activity.

Supplemental Financial Information

Our outstanding senior notes are guaranteed by certain of our wholly-owned subsidiaries, which are primarily homebuilding subsidiaries. These guarantees are full and unconditional. The guarantors of our senior notes are currently those subsidiaries that also guarantee Lennar Corporation's letter of credit facilities, Credit Facility and Delayed Draw Term Loan Facility, which are disclosed in Note 7 of the Notes to Condensed Consolidated Financial Statements. Under the indentures governing our senior notes, guarantees may be suspended or released under certain circumstances.

Supplemental information for the Obligors, which excludes non-guarantor subsidiaries and intercompany transactions, at May 31, 2026 is included in the following tables. Intercompany balances and transactions within the Obligors have been eliminated and amounts attributable to the Obligors' investment in consolidated subsidiaries that have not issued or guaranteed the senior notes have been excluded. Amounts due from and transactions with nonobligor subsidiaries and related parties are separately disclosed:

(In thousands)

Due from non-guarantor subsidiaries

$

Equity method investments

Total assets

Total liabilities

Six Months Ended

(In thousands)

Total revenues

$

Operating earnings

Earnings before income taxes

Net earnings attributable to Lennar

Off-Balance Sheet Arrangements

We regularly monitor the results of our Homebuilding unconsolidated joint ventures and any trends that may affect their future liquidity or results of operations. We also monitor the performance of homebuilding joint ventures in which we have investments on a regular basis to assess compliance with debt covenants. For those joint ventures not in compliance with the debt covenants, we evaluate and assess possible impairment of our investments. We believe that substantially all of the joint ventures were in compliance with their debt covenants at May 31, 2026.

Homebuilding: Investments in Unconsolidated Entities

As of May 31, 2026, we had equity investments in 48 active Homebuilding and land unconsolidated entities (of which 3 had recourse debt, 11 had non-recourse debt and 34 had no debt) compared to 50 active Homebuilding and land unconsolidated entities at November 30, 2025. Historically, we have invested in unconsolidated entities that acquired and developed land (1) for our homebuilding operations or for sale to third parties or (2) for the construction of homes for sale to third-party homebuyers. Through these entities, we have primarily sought to reduce and share our risk by limiting the amount of our capital invested in land, while obtaining access to potential future homesites and allowing us to participate in strategic ventures.

The use of these entities also, in some instances, has enabled us to acquire land to which we could not otherwise obtain access, or could not obtain access on as favorable terms, without the participation of a strategic partner. Participants in these joint ventures have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to homesites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large land parcels. Joint ventures with financial partners have allowed us to combine our homebuilding expertise with access to our partners’ capital.

Joint ventures with strategic partners have allowed us to combine our homebuilding expertise with the specific expertise (e.g., commercial or infill experience) of our partner. Each joint venture is governed by an executive committee consisting of members from the partners. Details regarding these investments, balances and debt are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

The following table summarizes the principal maturities of our Homebuilding unconsolidated entities (“JVs”) debt as per current debt arrangements as of May 31, 2026. It does not represent estimates of future cash payments that will be made to reduce debt balances. Many JV loans have extension options in the loan agreements that would allow the loans to be extended into future years.

Principal Maturities of Unconsolidated JVs by Period

(In thousands)

Total JV Debt

Thereafter

Other

Bank debt without recourse to Lennar

$

—

Land seller and other debt without recourse to Lennar

—

—

—

—

Maximum recourse debt exposure to Lennar

—

—

—

—

Debt issuance costs

—

—

—

—

Total

$

We own an approximately 40% interest in FivePoint Holdings, LLC., a NYSE listed company, and companies it manages, which own three large multi-use properties in California.

Multifamily: Investments in Unconsolidated Entities

At May 31, 2026, Multifamily had equity investments in 27 active unconsolidated entities that are engaged in multifamily residential developments (of which 18 had non-recourse debt and 9 had no debt) compared to 25 active unconsolidated entities at November 30, 2025. We invest in unconsolidated entities that acquire and develop land to construct multifamily rental properties. Through these entities, we are focusing on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. Participants in these joint ventures have been financial partners. Joint ventures with financial partners have allowed us to combine our development and construction expertise with access to our partners’ capital. Each joint venture is governed by an operating agreement that provides significant substantive participating voting rights on major decisions to our partners.

The Multifamily segment manages and has investments in LMV I, LMV II and Canada Pension Plan Investments (the "CPPIB Fund") and a new joint venture with an institutional investor (the "Institutional JV"), which are long-term multifamily development investment vehicles involved in the development, construction and ownership of class-A multifamily assets. The Multifamily segment expects the CPPIB Fund to have almost $1.0 billion in equity and Lennar's ownership percentage in the CPPIB Fund is 4%. The Multifamily segment expects the Institutional JV to acquire certain portfolio assets and invest additional capital to support pipeline opportunities. Details of each fund as of and during the six months ended May 31, 2026 are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

In addition, in December 2025, we sold a majority interest in Quarterra Group, Inc. ("Quarterra"), a subsidiary of the Multifamily segment, to TPG Real Estate (“TPG”), thus retaining a noncontrolling interest. TPG’s acquisition of Quarterra and its $1.0 billion strategic commitment, combined with Lennar’s insights, will accelerate Quarterra’s development pipeline and strengthen its platform for delivering thoughtfully designed rental communities in high-growth markets.

We regularly monitor the results of our Multifamily unconsolidated joint ventures and any trends that may affect their future liquidity or results of operations. We also monitor the performance of Multifamily joint ventures in which we have investments on a regular basis to assess compliance with debt covenants. For those joint ventures not in compliance with the debt covenants, we evaluate and assess possible impairment of our investment. We believe all of the joint ventures were in compliance with their debt covenants at May 31, 2026.

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of May 31, 2026. It does not represent estimates of future cash payments that will be made to reduce debt balances.

Principal Maturities of Unconsolidated JVs by Period

(In thousands)

Total JV Debt

Thereafter

Other

Debt without recourse to Lennar

$

—

Debt issuance costs

—

—

—

—

Total

$

Lennar Other: Investments in Unconsolidated Entities

As of May 31, 2026 and November 30, 2025, we had strategic technology investments in unconsolidated entities of $234.1 million and $235.0 million, respectively, accounted for under the equity method of accounting. Our strategic technology investments through our LENX business help to enhance the homebuying and home ownership experience, and help us stay at the forefront of homebuilding innovation. Details regarding these investments are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

As part of the sale of the Rialto investment and asset management platform, we retained the right to receive a portion of payments with regard to carried interests if certain funds meet specified performance thresholds. We periodically receive advance distributions related to the carried interests in order to cover income tax obligations resulting from allocations of taxable income to the carried interests. These distributions are not subject to clawbacks but reduce future carried interest payments to which we become entitled from the applicable funds and were recorded as equity in earnings (losses) in the condensed consolidated statement of operations. Our investment in the Rialto funds totaled $130.3 million and $133.0 million as of May 31, 2026 and November 30, 2025, respectively.

Option Contracts

We often obtain access to land through option contracts, which generally enable us to control portions of properties owned by third parties (including land banks) and unconsolidated entities until we have determined whether to exercise the options. Since fiscal year 2020, we have increased the percentage of our total homesites that we control through options rather than own.

As part of our focus on strategic relationships to further enhance our land-lighter strategy, at the end of fiscal year 2020 we entered into an arrangement with various land bank investor groups. Under the arrangement, in most instances when we want to acquire a property for use in our for-sale single-family home business, we will offer the investor group the opportunity to acquire the property and give us an option to purchase all or a portion of it back in the future, if it is mutually beneficial to both parties. To the extent the investor group does not elect to purchase properties we identify, we can utilize our other investor relationships to have other investor groups purchase the land or we can purchase it directly.

The arrangement with the investor group, together with existing and other strategic partnerships, including the spin-off of Millrose in 2025, were significant steps in our strategy to migrate to a higher percentage of our homesites which we control but do not own, which we expect will result in greater cash flow and higher returns on assets and equity.

The table below indicates the number of homesites to which we had access through option contracts with third parties and unconsolidated JVs (i.e., controlled homesites) and homesites owned (excluding homes in inventory):

Years of

Controlled Homesites

Owned Homesites

Total Homesites

Supply Owned (1)

East

Central

South Central

West

Other

Total homesites

% of total homesites

2%

Years of

Controlled Homesites

Owned Homesites

Total Homesites

Supply Owned (1)

East

Central

South Central

West

Other

Total homesites

% of total homesites

2%

(1)Based on trailing twelve months of home deliveries.

Details on option contracts, transactions with land banks and related consolidated inventory not owned and exposure are included in Note 9 of the Notes to Condensed Consolidated Financial Statements.

Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Form 10-K, except for an increase of $177 million in borrowings under the Financial Services' warehouse repurchase facilities.

(3) Recently Adopted Accounting Pronouncements

See Note 1 of the Notes to Condensed Consolidated Financial Statements included under Item 1 of this Quarterly Report on Form 10-Q for a discussion of recently adopted accounting pronouncements.

(4) Critical Accounting Policies

There have been no significant changes to our critical accounting policies during the six months ended May 31, 2026 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Form 10-K.