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.

Homebuilder Ryland Group posts loss of $65.7 million

From the LA Times

Calabasas-based home builder Ryland Group Inc. reported a third-quarter loss of $65.7 million Wednesday as revenue dropped 26.7%.The hard-hit builder's sales were $526.2 million during the period of July 1 through Sept. 30, down from $717.5 million for the same period a year earlier.

The loss of $1.54 a share exceeded 11 analysts' average projection of $1.10 a share, according to a Bloomberg survey. Ryland released the earnings results after the close of regular trading. The company's shares fell $1.10 to $17.90. The stock has dropped 35% this year. Company officials declined to comment, saying they would do so in a conference call with analysts today.
Ryland builds homes in 17 states. Some of the firm's California developments are in areas particularly hard-hit by the housing crash, including the Inland Empire and the Coachella Valley. Like other construction businesses, the firm has been hurt by a reduction in demand and prices for homes. Ryland closed escrow on 2,017 homes in the quarter, compared with 2,495 closings the same period last year. The company's average closing price on a home for the quarter was $254,000, down from $284,000.

Is now the time to buy Homebuilders Stock? Some say yes

Dueling Fools: Bullish on Homebuilders - Is now the time to buy homebuilders stock?
http://www.fool.com/personal-finance/home/2007/10/19/dueling-fools-bullish-on-homebuilders.aspx
Anders Bylund October 19, 2007
Yeah, you read that right: I'm bullish on homebuilders.

That's kind of like waving a Yankees pennant at Fenway Park, but there it is. It just makes sense when you think about it.

Remember that other bubble that popped seven years ago? Of course you do; the downfall of Yahoo! (Nasdaq: YHOO) and Amazon.com (Nasdaq: AMZN) and the Nasdaq as a whole was too obvious and deliciously ironic to miss. Anything with "dot-com" in its name got pumped up to ridiculous valuations, and then the whole thing came crashing down all at once.
That's what's happening to the housing market right now. Home prices climbed too close to the sun, followed by insane loan terms designed to let people buy houses they really couldn't afford. The joyride is done, my neighborhood is full of unsold flip-me properties, and homebuilder stocks are going the way of property prices -- down, down, down.

And that's where you'll find some of the most amazing deals you'll ever see on the stock market.
Look back at the tech bubble again. Yes, it hurt to hold stock in the big Y or Amazon back in 2000. But if you bought those stocks when they bottomed out in 2001, you'd be sitting on better than a four-bagger in Yahoo today, and a Lynch-esque 10-bagger in Amazon -- better than a 40% annual return, my friend.

That's the kind of rebound opportunity we're seeing in the housing market today. An entire industry just can't roll over and die, especially one as ingrained into the American economy and culture as homebuilding. And some of these companies are brilliantly run operations that will simply ride out this storm, rising phoenix-like from the ashes in a couple of years.
So the trick is to find the good homebuilders, those that will survive the shakeout and pounce on a less competitive market when the credit crunch is over. Take a look at these candidates, for example:

Again, you're not dreaming or hallucinating. You can still find profitable homebuilders whose stocks are priced well below their annual sales or tangible book values. They're household names like Ryland and Toll Brothers, and most of them back up their numbers with strong cash flows, too.

It's just a matter of diving into that pile of excellent value propositions and finding the ones most likely to survive the breakdown. Every crash has a bottom, and while it's tough to call the lowest point with precision, I think we're close enough now to warrant some trash-picking.