Pulte Homes Reports Eighth Straight Loss as Sales Slump Deepens

From Bloomberg - Oct. 22 -- Pulte Homes Inc., the third-largest U.S. homebuilder, reported its eighth consecutive quarterly loss as the frozen credit markets reduced mortgage lending, deepening the housing recession.

The third-quarter net loss narrowed to $280.4 million, or $1.11 a share, from $787.9 million, or $3.12, a year earlier, the Bloomfield Hills, Michigan-based company said today in a statement. The loss was more than analysts estimated. Revenue fell 37 percent to $1.56 billion from $2.5 billion a year ago.

Construction of single-family homes fell in September to the lowest in 26 years as builders cut production to match vanishing demand. Mortgage rates are rising, unemployment is increasing and only the most-credit worthy homebuyers are able to borrow, just as the growth in foreclosures across the country adds to the inventory of homes for sale.

``The competition between the builders is going to become ruthless,'' Vicki Bryan, senior high-yield analyst at Gimme Credit LLC, said in an interview before the results were issued. ``There's a chance this year could top last year as far as horrible quotient.''

Pulte, the builder of Del-Webb homes for retirees, was projected to report a net loss of 53 cents a share, according to the average estimate of 12 analysts in a Bloomberg survey.

The shares fell 60 cents, or 5.7 percent, to $9.95, in New York Stock Exchange composite trading, giving the company a market value of $2.6 billion. Pulte dropped 33 percent in the past 12 months.

Also after the close of regular trading today, Ryland Group Inc., the California homebuilder that lost 31 percent of its value in the past year, reported a third-quarter loss as home sales fell and increasing foreclosures pushed down prices.

The net loss in the three months ended Sept. 30 was $65.7 million, or $1.54 a share, compared with a net loss of $54.7 million, or $1.30 a share, a year earlier, Calabasas, California- based Ryland said today in a Business Wire statement.

The average price for a Pulte home in the second quarter fell 11 percent to $320,000. Pulte, founded in 1950 by William Pulte, the company's largest shareholder, sold the most homes in the second quarter in Arizona, Nevada and New Mexico.

Pulte's results came a day after NVR Inc., the builder of Ryan Homes, reported a 60 percent decline in net income.

NVR is the only major homebuilder to remain profitable in the three-year housing slump. NVR has remained profitable because it uses options to control land. That has prevented the company from having to reduce the estimated value of its land assets significantly.
In a July survey, the Federal Reserve said that 75 percent of U.S. lenders indicated they'd tightened their standards for prime mortgage lending.

Employers cut the most jobs in five years in September, pushing the unemployment rate to 6.1 percent as nonfarm payrolls fell by 159,000, the U.S. Labor Department said on Oct. 3.
U.S. housing starts will drop to 525,000 in the second quarter of 2009, a record 70 percent decline from the peak in the third quarter of 2005, according to a Mortgage Bankers Association forecast. Mortgage originations for home purchases will fall 20 percent this year to $912 billion, according to Jay Brinkmann, the association's chief economist.