Creative sales strategies helped Lennar Corp. (LEN) blow through unsold inventory and easily beat the Street's revenue estimate, but it wasn't enough to narrow the quarter's loss. The builder also now has fewer homes to sell going forward.

In its fiscal second quarter, Lennar, the nation's fourth-largest builder by annual closings, saw its loss widen on increased write-downs and charges. For the period ended May 31, it posted a loss of $125.2 million, or 76 cents a share, compared with a year-earlier loss of $120.9 million, or 76 cents a share. There were 3.9% more shares outstanding in the more recent period. The latest results included 65 cents in write-downs and tax-valuation allowance charges, compared with 60 cents a year earlier.

Revenue dropped 21% to $891.9 million, though that beat the $597 million analysts surveyed by Thomson Reuters had expected.

That helped send the Miami-based builder's stock soaring: After being up more than 4% in the pre-market, shares recently traded up 98 cents, or 12.5%, at $8.80, compared with 3.17% for the Dow Jones US Home Construction Index. All the major builders saw gains topping 1.6%.

The builder said liquidity was aided by shaving completed, unsold inventory by 53% to 626 homes from 1,321 homes at Feb. 28. The industry's average is 1,365 homes, with 817 of them finished, according to JPMorgan.

Known as speculative inventory, unsold homes have dogged builders during the downturn because they typically require extensive, profit-eroding specials - such as free upgrades or tropical vacations - to catch buyers' eyes. Lennar has shown itself as one of the more creative marketers: Its specials have included no-money-down and a 3.625% mortgage rate - one of the industry's lowest for the loan's life, instead of a "teaser" for an introductory period before it resets higher. More recently, it tried a "sealed-bid home auction" that let buyers help set the price.

Such specials appear to have been effective, given that builders face tough competition from foreclosures which can sell for bargain prices. The cancellation rate came in at an impressive 15%, down from 22% in 2008's second quarter. The rate, which compares with an industry average of 25%, is well below the 33% the builder reported at the end of 2006, according to JPMorgan.

But the deals came with a cost: Incentives, which were some 21% of the average selling price in the quarter, according to UBS, and "will likely remain elevated as the company focuses on maintaining its sales pace."

The dramatic reduction in front doors leaves the builder with fewer homes to sell at a time when builders have slowed down construction in response to the worst downturn in decades. That could hurt Lennar as it tries to lure first-time buyers looking to tap a federal tax credit of up to $8,000 for deals before Dec. 1. Such contracts need to be inked soon to close on time.

Meanwhile, the company recorded $99 million in pre-tax impairments and option write-offs, well below Credit Suisse's $428 million estimate.

That doesn't ease the firm's prediction of pain going forward. "We still expect $1.1 billion in total future charges as we continue to see significant risk from its joint venture holdings and expect further pricing pressures will hurt land values."

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com

(Kerry Grace contributed to this report.)