Pulte Homes Loss Widens to $696.1 Million in Housing Slump
April 23 2008 - Pulte Homes Inc., the fourth-largest U.S. homebuilder, reported a $696.1 million first-quarter net loss, about three times wider than analysts expected, as stricter mortgage-lending standards cut demand.
The net loss swelled to $2.75 a share, from $85.7 million, or 34 cents, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. Pulte’s sixth consecutive quarterly loss included $663.6 million of expenses to write down the value of land. Revenue declined 23 percent to $1.45 billion.
“The difficult housing environment continued to erode during the first quarter of 2008,” Richard Dugas, Pulte’s chief executive officer, said in the statement. “Buyer demand for new homes continues to be soft, home prices remain under pressure, and overall buyer confidence is weak.”
New home sales in the U.S. fell in February to the lowest in 13 years as potential buyers found it difficult to get home loans. Total mortgage originations are projected to fall 10 percent in the first quarter to $565 billion from a year earlier, according to a Mortgage Bankers Association forecast.
Pulte, the builder of Del Webb-brand homes for retirees, was projected to report a net loss of 91.5 cents a share, according to the average estimate of 10 analysts in a Bloomberg survey.
Pulte shares fell 72 cents, or 5.2 percent, to $13.10 at 4:02 p.m. in New York Stock Exchange composite trading today. They’ve dropped 53 percent over the past 12 months, compared with a 43 percent decline in a Standard & Poor’s measure of 15 homebuilders.
Pulte ended the quarter with $1.1 billion in cash and said it expects to have as much as $2.2 billion in cash at the end of 2008.
A Standard & Poor’s measure of 15 home construction companies, including Pulte, has gained 10 percent this year on expectations interest rate cuts by the Federal Reserve will make mortgages more affordable and falling home prices will boost demand.
Pulte is cutting prices on homes to reduce inventory. The average price for a Pulte home in the first quarter fell 11 percent to $295,000.
The 58-year-old company slashed staff to about 8,500 as of Dec. 31, down 31 percent from a year earlier.
New orders fell 36 percent to 5,402 homes from a year earlier. The company’s backlog, or homes under contract and not yet sold, fell 36 percent to 8,559. The value of the backlog was $2.6 billion.
Pulte, which operates in 26 U.S. states, generated the most revenue in the quarter from home sales in its Southwest region of Arizona, Nevada and New Mexico.
Sales of previously owned homes fell in March for the seventh time in eight months to an annual rate of 4.93 million, from 5.03 million in February, the National Association of Realtors said yesterday. The median sales price declined 7.7 percent from a year earlier.
The number of homes for sale at the end of March increased by 40,000 to 4.06 million. At the current sales pace, that represented 9.9 months’ worth, up from 9.6 months’ worth at the end of February.
U.S. sale prices dropped 2.4 percent in February from a year earlier, led by a 9.2 percent decline in western states such as California, the Office of Federal Housing Enterprise Oversight in Washington said yesterday. The monthly house price index is down 3.1 percent from its peak in April 2007. Prices rose 0.6 percent from January.
Pulte Loss Widens to $696.1 Million in Housing Slump
By Brian Louis | Bloomberg