Pulte Homes Loss Narrows, But Buyers Still Shaky
Pulte Homes posted a smaller quarterly loss on Wednesday, but said buyer confidence remained shaky.
The second-quarter loss narrowed to $158.4 million, or 63 cents per share, from $507.6 million, or $2.01 per share, a year earlier.
Excluding a tax benefit, the loss was 85 cents per share. On that basis, analysts expected a loss of 82 cents per share, according to Reuters Estimates.
The U.S. housing market has been in decline since July 2006, when excessive building and loose credit standards triggered a drop in prices and a wave of foreclosures.
As prices have dropped, home builders have marked down the value of inventory on their books. Pulte's loss included $220.1 million in pretax charges related to inventory impairments and other land-related charges, but also included a $56.8 million tax benefit.
"The operating environment for homebuilding continued to deteriorate during the second quarter of 2008,'' said Chief Executive Richard Dugas Jr. "Buyer confidence remains under pressure, both from the weakness in housing as well as concerns about the overall economy.''
Revenue from homebuilding fell 18 percent to $1.6 billion as closings declined 8 percent to 5,438, and the average selling price dropped 11 percent to $268,000.
New orders slid 32 percent to 5,133 homes, while the value of the orders was off 42 percent to $1.4 billion.
Home builder sentiment as measured by the NAHB/Wells Fargo Housing Market index fell 2 points in July to 16, a record low.
The index measuring traffic of prospective buyers slid to 12 from 16, also a record low.
In response to the deteriorating market, U.S. home builders have shifted their focus from profit and growth to generating cash by selling the land and inventory they accumulated at peak prices during boom times. Pulte ended the quarter with a $1 billion cash balance.