New Home Construction Reports - October
Tuesday, October 24, 2006
Some housing bubble reports from Wall Street and Washington. "M.D.C. Holdings Inc. reported third-quarter net income fell 60% as profit margins narrowed in more competitive markets and home orders plunged 40% from a year earlier. The 'operating environment in most markets became increasingly competitive in the face of continued expansion of unsold new and existing home inventories,' said CEO Larry A. Mizel."
"Margins thinned particularly in California, Nevada and Virginia, M.D.C. said. In the third quarter the company said it booked pre-tax charges of $29.4 million for inventory impairments and project cost write-offs."
"'Builder concessions and incentives continue to rise,' said CEO Mizel. 'Confronted with expanding inventories and increased uncertainty, many buyers displayed a wait-and-see approach to purchasing a new home.'"
"'M.D.C. said home orders in the third quarter fell 40% to 2,120 from 3,551 in the year-earlier period. The cancellation rate jumped to 48.5% from 25.7%."
"'We expect cancellations to remain high as long as home prices deteriorate,' wrote Banc of America Securities analyst Daniel Oppenheim. 'We believe land impairments will likely continue and increase from the $19.9 million charge in [the third quarter] due to the relatively young age and geographic concentration in stretched markets of the company's lots supply,' he added."
"Homebuilder Technical Olympic USA, Inc. reported consolidated net sales orders of 1,470 for the quarter ended September 30, 2006, a 19% decrease from the... quarter ended September 30, 2005. Joint venture net sales orders for the third quarter of 2006 were 125, an 86% decrease the third quarter of 2005."
"TOUSA's consolidated cancellation rate was 33% for the third quarter of 2006 compared to 20% for the third quarter of 2005. TOUSA's combined cancellation rate for the third quarter of 2006 was 44% compared to 18% for the third quarter of 2005."
"The Company anticipates a pre-tax charge in the range of $35 million to $48 million for the third quarter of 2006 related to land deposit write-offs and asset impairment charges."
Thanks to Ben at The Housing Bubble Blog for gathering the information.
