Price Cuts Of More Than 15% By Lennar Fail To Entice Buyers

According to an article on the Wall Street Journal, a more than 15% cut in prices by builder Lennar Corp (NYSE: LEN) is also insufficient to drive buyers like Linda Primm to make a move.

Sales of new homes have plunged since the tax credit available to home buyers expired at the end of April. To perk up the response, builders have started slashing prices and offering concessions, but to no avail. KB Home (NYSE: KBH) had announced a 23% fall in its orders for the second quarter last week.

Although price cuts and concessions are part of the game, further reduction will only reduce revenue, delaying the sector’s recovery until 2011.

Analyst Demir Gjokaj of Majestic Research stated, "The rest of the summer and the fall are going to be tough for the builders.” "Demand has remained far weaker for far longer than builders expected. Price incentives can't rebuild the spent demographics that cratered demand. That will take time," he added.

LEN’s shares gained 1.79% to $14.22 at 10:57 am.

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