The press reacts to a homebuilders results today. "Is this the long-awaited demise of the new housing boom/bubble/occurrence? We've seem some pretty dicey new order numbers from the likes of KB Homes and Toll Brothers, and there's plenty of chatter about what incentives builders might be forced to provide to prevent the cancellation of existing orders and/or drum up new ones."

"Into this mess come Lennar's fiscal first-quarter earnings. New orders were up just 4%, the weakest result I've seen here in a while. What's more, the company reported that gross margin in the first quarter came under a little pressure from incentive programs in the West and Central operating areas."

"I apologize for sounding like a broken record here, but I'm miffed once again that the company still does not include a balance sheet or cash flow statement with its release. If a company is going to talk up its balance sheet (as management did several times on their conference call), it'd be nice to actually, you know, see it."

"Lennar Corp. CEO Stuart Miller said he remains optimistic about the company's earnings prospects for the rest of the year and into 2007 despite cooling market conditions. 'Market conditions have been slower in many of our major markets across the country,' said Miller. 'Not only have price escalations slowed materially in most markets, but traffic has been cooling down as well.'"

"Indeed, Lennar, like other builders, faced weaker housing demand, a surge in cancellations and more incentives and price discounting in the latest quarter. Orders rose only 4%, which is significantly slower than the 25% increase enjoyed in the previous quarter. The company's cancellation rate rose to 24% from less than 20% a year ago, and the company's average discounting and incentive program amounted to 4% of the average home price, up from 2.75% a year ago."

"'These slower conditions, however, have not amounted to the feared bursting of the bubble or a meltdown in the industry,' Miller said. Miller is predicting a 'soft correction' rather than a crash in the home-building world."

"Miller acknowledges the company has faced some oversupply issues due to speculators, or flippers, deciding to sell, rather than buy, homes. This has created an 'overhang' in certain markets that saw huge price increases over the past few years."

"Gross said demand has slowed in Sacramento, San Diego and Tucson, and the company significantly boosted incentives in Minnesota, Illinois, Colorado, Northern Virginia and Nevada in order to move sales. Among Lennar's stronger markets in the quarter were Florida, the Carolinas and New Jersey, while some sections of the West, such as the Tucson, Ariz., area, saw a fall in new orders, the company said."

"The company also plans to repurchase 2.5 million shares in the coming months. 'While there might be shifts and jogs along the way due to economic factors and other things, people still need a place to live, and we think that the prospects for the home-building industry ultimately become good,' Miller said."