S&P 500 Heavyweight Lennar’s Earnings Plunge Puts Rate Cuts to the Test

Federal Reserve rate cuts are seen as a potential lifeline for the struggling housing market, with a recent 50 basis-point slash aiming to lower mortgage rates and stimulate demand. Homebuilder Lennar’s grim earnings report, projecting a 49% profit drop, underscores the sector’s pain. While lower rates could ease monthly payments and attract buyers, critics argue this is a temporary fix for a deep-seated affordability crisis.

The housing market’s woes stem from high rates and a lack of affordable inventory. Builders have relied on incentives to sell homes, eroding profit margins. While a sustained downtrend in rates could boost demand, a lasting recovery requires broader policy changes like zoning reforms and tax credits to increase supply. Without these measures, a housing rebound may be short-lived. A true fix demands a holistic approach, not just rate adjustments.