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Financial Instruments and Fair Value Disclosures
 9 Months Ended
Aug. 31, 2025
Fair Value Disclosures [Abstract]  
Financial Instruments and Fair Value Disclosures Financial Instruments and Fair Value Disclosures
The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at August 31, 2025 and November 30, 2024, using available market information and what the Company believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. The table excludes cash and cash equivalents, restricted cash, receivables, net and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.
At August 31, 2025At November 30, 2024
(In thousands)Fair Value HierarchyCarrying AmountFair ValueCarrying AmountFair Value
ASSETS
Financial Services:
Loans held-for-investment, net (1)Level 3$— — 60,969 61,044 
Loans held-for-sale (1)Level 350,284 50,284 — — 
Investments held-to-maturityLevel 3133,558 133,413 135,646 138,160 
LIABILITIES
Homebuilding senior notes and other debt payable, netLevel 2$3,523,766 3,562,272 2,258,283 2,264,375 
Financial Services notes and other debt payable, netLevel 21,863,845 1,864,336 1,930,956 1,931,515 
(1)As of August 31, 2025, loans held-for-investment of $61.0 million (fair value of $50.3 million) were transferred to loans held-for-sale, based on the Company’s intent to sell the loans in the near future.
The following methods and assumptions are used by the Company in estimating fair values:
Financial Services - The fair values above are based on quoted market prices, if available. The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information. The fair value of residential loans held-for-sale for which there is no active market for similar mortgage loans is determined using an independent third-party valuation that uses a discounted cash flow model to estimate fair value and is categorized as Level 3. The key assumptions used in the model, which are generally unobservable inputs, are mortgage prepayment rates, default rates, loss severity rates, and discount rates. Loans held-for-sale are carried at the lower of cost or fair value. For notes and other debt payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the majority of the borrowings.
Homebuilding - For senior notes and other debts payable, the fair value of fixed-rate borrowings is primarily based on quoted market prices and the fair value of variable-rate borrowings is based on expected future cash flows calculated using current market forward rates.
Fair Value Measurements:
GAAP provides a framework for measuring fair value, expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value summarized as follows:
Level 1: Fair value determined based on quoted prices in active markets for identical assets.
Level 2: Fair value determined using significant other observable inputs.
Level 3: Fair value determined using significant unobservable inputs.
The Company’s financial instruments measured at fair value on a recurring basis are summarized below:
Fair Value HierarchyFair Value at
(In thousands)August 31, 2025November 30, 2024
Financial Services Assets:
Residential loans held-for-saleLevel 2$1,953,557 2,200,402 
LMF Commercial loans held-for-saleLevel 377,787 50,316 
Mortgage servicing rightsLevel 33,290 3,463 
Forward optionsLevel 11,776 1,458 
Lennar Other Assets:
Investments in equity securitiesLevel 1$167,325 204,777 
Investments available-for-saleLevel 339,069 40,578 
Residential and LMF Commercial loans held-for-sale in the table above include:
At August 31, 2025At November 30, 2024
(In thousands)Aggregate Principal BalanceChange in Fair ValueAggregate Principal BalanceChange in Fair Value
Residential loans held-for-sale$1,995,453 (41,896)2,263,310 (62,907)
LMF Commercial loans held-for-sale
78,050 (263)50,020 296 
The estimated fair values of the Company's financial instruments have been determined by using available market information and what the Company believes to be appropriate valuation methodologies. Considerable judgement is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. The following methods and assumptions are used by the Company in estimating fair values.
Financial Services residential loans held-for-sale - The fair value of residential loans held-for-sale that trade in active secondary markets is determined based upon quoted market prices for similar mortgage loans, adjusted for credit risk and other loan characteristics, and is categorized as Level 2. The Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The fair value of these are included in Financial Services’ loans held-for-sale as of August 31, 2025 and November 30, 2024. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.
LMF Commercial loans held-for-sale - The fair value of commercial loans held-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. The details and methods of the calculation are unchanged from the fair value disclosure in the Company's Notes to the Financial Statements section in its 2024 Form 10-K. These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan. While the cash payments on the loans are contractual, the discount rate used and assumptions regarding the relative size of each class in the CMBS capital structure can significantly impact the valuation. Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust.
Mortgage servicing rights - Financial Services records mortgage servicing rights when it sells loans on a servicing-retained basis or through the acquisition or assumption of the right to service a financial asset. The fair value of the mortgage servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates and are noted below:
August 31, 2025November 30, 2024
Unobservable inputs:
Mortgage prepayment rate9%8%
Discount rate13%13%
Delinquency rate 12%12%
Forward contracts, forward options and interest rate swaps - Fair value of forward contracts, forward options and interest rate swaps is based on independent quoted market prices for similar financial instruments. The fair value of these are included in Financial Services' other assets and other liabilities and the Company recognizes the changes in the fair value of the premium paid as Financial Services' revenues.
Lennar Other investments in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices. The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized gains (losses) from technology investments on the Company’s condensed consolidated statements of operations and comprehensive income (loss).
Lennar Other investments available-for-sale - The fair value of investments available-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. The value of an assumed CMBS capital structure is calculated, generally, by discounting the cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads.
The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis are shown below by financial instrument and financial statement line item:
Three Months EndedNine Months Ended
August 31,August 31,
(In thousands)2025202420252024
Changes in fair value included in Financial Services revenues:
Loans held-for-sale$23,361 30,482 21,011 1,617 
Mortgage loan commitments34,590 22,400 45,511 (9,702)
Forward contracts(36,411)(30,043)(7,919)42,874 
Forward options68 2,687 271 1,633 
Interest rate swaps(6,652)(1,621)(6,490)(1,665)
Changes in fair value included in Lennar Other realized and unrealized gains from technology investments:
Investments in equity securities$99,223 39,123 7,280 12,472 
Changes in fair value included in other comprehensive income (loss), net of tax:
Lennar Other investments available-for-sale$— 444 (1,510)2,161 
Interest on Financial Services loans held-for-sale and LMF Commercial loans held-for-sale measured at fair value is calculated based on the interest rate of the loans and recorded as revenues in the Financial Services’ statement of operations.
The following table sets forth the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements in the Company's Financial Services segment:
Three Months Ended August 31,
20252024
(In thousands)Mortgage servicing rightsLMF Commercial loans held-for-saleMortgage servicing rightsLMF Commercial loans held-for-sale
Beginning balance$3,467 72,203 3,652 66,715 
Purchases/loan originations45 177,837 174 236,665 
Sales/loan originations sold, including those not settled— (172,643)— (145,325)
Disposals/settlements(104)— (122)(9,500)
Changes in fair value (1)(118)483 (338)2,312 
Interest and principal paydowns— (93)— — 
Ending balance$3,290 77,787 3,366 150,867 
Nine Months Ended August 31,
20252024
(In thousands)Mortgage servicing rightsLMF Commercial loans held-for-saleMortgage servicing rightsLMF Commercial loans held-for-sale
Beginning balance$3,463 50,316 3,440 13,459 
Purchases/loan originations322 486,677 406 449,000 
Sales/loan originations sold, including those not settled— (458,466)— (301,610)
Disposals/settlements(257)— (193)(9,500)
Changes in fair value (1)(238)(264)(287)(673)
Interest and principal paydowns— (476)— 191 
Ending balance$3,290 77,787 3,366 150,867 
(1)Changes in fair value for LMF Commercial loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues.
The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs. The fair values included in the table below represent only those assets whose carrying values were adjusted to fair value during the respective periods disclosed. The assets measured at fair value on a nonrecurring basis are summarized below:
Three Months Ended August 31,
20252024
(In thousands)Fair Value
Hierarchy		Carrying ValueFair ValueTotal Losses, Net (1)Carrying ValueFair ValueTotal Losses, Net (1)
Homebuilding - non-financial assets:
Finished homes and construction in progress (2)Level 3$479,233 430,986 (48,247)120,811 111,776 (9,035)
Deposits and pre-acquisition costs on real estate (3)Level 38,919 — (8,919)206 — (206)
Financial Services - financial assets:
Loans held-for-sale (4)Level 3$61,001 50,284 (10,717)— — — 
Multifamily - non-financial assets:
Investments in unconsolidated entities (5)Level 3$— — — 139,980 49,970 (90,010)
Nine Months Ended August 31,
20252024
(In thousands)Fair Value
Hierarchy		Carrying ValueFair ValueTotal Losses, Net (1)Carrying ValueFair ValueTotal Losses, Net (1)
Homebuilding - non-financial assets:
Finished homes and construction in progress (2)Level 3$1,221,892 1,103,619 (118,273)313,120 280,761 (32,359)
Land and land under development (2)Level 3191 134 (57)— — — 
Deposits and pre-acquisition costs on real estate (3)Level 317,847 — (17,847)3,408 — (3,408)
Financial Services - financial assets:
Loans held-for-sale (4)Level 3$61,001 50,284 (10,717)— — — 
Multifamily - non-financial assets:
Investments in unconsolidated entities (5)Level 3$10,716 — (10,716)139,980 49,970 (90,010)
(1)Represents losses due to valuation adjustments and deposit and pre-acquisition write-offs recorded during the respective periods.
(2)Valuation adjustments for finished homes and construction in progress, and land and land under development were included in Homebuilding costs and expenses in the Company's condensed consolidated financial statements.
(3)Forfeited deposits and write-off of pre-acquisition costs on real estate were included in Homebuilding costs and expenses in the Company's condensed consolidated statements of operations and comprehensive income (loss).
(4)Changes in fair value below amortized cost basis are recognized through a valuation allowance, with the adjustment included in Financial Services earnings in the Company's condensed consolidated financial statements.
(5)Valuation adjustments related to investments in unconsolidated entities were primarily included in Multifamily other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income (loss).
Finished homes and construction in progress are included within inventories. Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory is written down to fair value. The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its 2024 Form 10-K.
The Company estimates the fair value of inventory evaluated for impairment based on market conditions and assumptions made by management at the time the inventory is evaluated, which may differ materially from actual results if market conditions or assumptions change. For example, changes in market conditions and other specific developments or changes in assumptions may cause the Company to re-evaluate its strategy regarding previously impaired inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts.
On a quarterly basis, the Company reviews its active communities for indicators of potential impairments. The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded:
Communities with valuation adjustments
At or for the Nine Months Ended# of active communities# of communities with potential indicator of impairment# of communities
Fair Value
(in thousands)
Valuation Adjustments
(in thousands)
August 31, 20251,66411321$49,884 $25,633 
August 31, 20241,28324425,769 15,263 
The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments:
Nine Months Ended August 31,
20252024
Unobservable inputsRangeRange
Average selling price (1)$168,000—872,000178,000—282,000
Absorption rate per quarter (homes)2—1110—15
Discount rate20%20%
(1)Represents the projected average selling price on future deliveries for communities in which the Company recorded valuation adjustments during both the nine months ended August 31, 2025 and 2024.
The Company disclosed its accounting policy related to investments in unconsolidated entities and its review for indicators of impairment for the long-lived assets of an unconsolidated entity and the decline in the fair value of an investment below the carrying value in the Summary of Significant Accounting Policies in its 2024 Form 10-K.
The Company evaluates if a decrease in the fair value of an investment below the carrying value is other-than-temporary. This evaluation includes certain critical assumptions made by management: (1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions, (3) the length of the time and the extent to which the market value has been less than cost and (4) various other factors, which include age of the venture, relationships with the other partners and banks, general economic market conditions, land status, and liquidity needs of the unconsolidated entity. The Company generally estimates the fair value of an investment in an unconsolidated entity by using a cash flow analysis for estimated future net distributions from the unconsolidated entity, subject to the perceived risks associated with the unconsolidated entity’s cash flow streams. During the three months ended August 31, 2025, the Company evaluated the fair value of its investments in unconsolidated entities using a cash flow analysis and concluded that the investments had no other-than-temporary impairment. During the nine months ended August 31, 2025, the Company evaluated the fair value of its investments in unconsolidated entities using a cash flow analysis and concluded that the investments had an other-than-temporary impairment of $10.7 million, included in Multifamily other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income (loss). During the three and nine months ended August 31, 2024, the Company evaluated the fair value of its investments in unconsolidated entities using a cash flow analysis and concluded that the investments had an immaterial amount of other-than-temporary impairment.
The Company estimates the fair value of investments in unconsolidated entities evaluated for impairment based on market conditions and assumptions made by management at the time the investment is evaluated, which may differ materially from actual results if market conditions or assumptions change.