Looking back on home builders stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Lennar (NYSE: LEN) and its peers.

Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.

The 12 home builders stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 2.9% while next quarter’s revenue guidance was in line.

Thankfully, share prices of the companies have been resilient as they are up 5.2% on average since the latest earnings results.

Lennar (NYSE: LEN)

One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Lennar reported revenues of $8.81 billion, down 6.4% year on year. This print fell short of analysts’ expectations by 2.7%. Overall, it was a softer quarter for the company with a significant miss of analysts’ revenue and adjusted operating income estimates.

Stuart Miller, Executive Chairman and Co-Chief Executive Officer of Lennar, said, "Our third quarter results reflect both the continued pressures of today's housing market and the consistency of Lennar's operating strategy. This quarter, we delivered 21,584 homes and recorded 23,004 new orders. Achieving these results required additional incentives, resulting in a reduced average sales price of $383,000, and our gross margin drifted down to 17.5%, while our SG&A expenses came in at 8.2%, reflecting the soft market conditions."

Unsurprisingly, the stock is down 10.1% since reporting and currently trades at $119.86.

Read our full report on Lennar here, it’s free for active Edge members.

Best Q3: Champion Homes (NYSE: SKY)

Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.

Champion Homes reported revenues of $684.4 million, up 11% year on year, outperforming analysts’ expectations by 6.9%. The business had an incredible quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.

Champion Homes pulled off the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 31.5% since reporting. It currently trades at $87.49.

Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Meritage Homes (NYSE: MTH)

Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE: MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.

Meritage Homes reported revenues of $1.42 billion, down 10.8% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ adjusted operating income estimates.

Meritage Homes delivered the weakest performance against analyst estimates in the group. The stock is flat since the results and currently trades at $71.13.

Read our full analysis of Meritage Homes’s results here.

KB Home (NYSE: KBH)

The first homebuilder to be listed on the NYSE, KB Home (NYSE: KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.

KB Home reported revenues of $1.62 billion, down 7.5% year on year. This print topped analysts’ expectations by 1.2%. Taking a step back, it was a slower quarter as it recorded a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ backlog estimates.

KB Home had the weakest full-year guidance update among its peers. The stock is up 2% since reporting and currently trades at $64.46.

Read our full, actionable report on KB Home here, it’s free for active Edge members.

Taylor Morrison Home (NYSE: TMHC)

Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.

Taylor Morrison Home reported revenues of $2.10 billion, down 1.2% year on year. This result beat analysts’ expectations by 3.4%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.

The stock is flat since reporting and currently trades at $62.00.

Read our full, actionable report on Taylor Morrison Home here, it’s free for active Edge members.

Market Update

Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.