Several of the nation's largest public home builders reported earnings this week, and I was struck by the way their CEOs spoke of the current state of housing, especially in what I'm sure were some very carefully crafted written earnings statements.
From D.R. Horton's Donald Horton:
"Market conditions in the homebuilding industry are still challenging, with high foreclosures, significant existing home inventory, high unemployment, tight mortgage lending standards and weak consumer confidence. However, housing affordability remains near record highs, interest rates are favorable and new home inventory is still very low," Horton said. "We continue to focus on providing affordable homes for the first-time buyer while having product available for move-up buyers, further adjusting our cost structure relative to our current sales pace."
Translation: We're still in the dumps, but we're lowering prices, so come on and buy.
Pulte's Richard Dugas: "Over the near term, we expect the industry will continue to face low levels of demand and that overall operating conditions will remain highly competitive." Dugas then said he expects a return to profitability in the "back half of the year."
Translation: Still bad, but it has to get better, right?
Ryland's CEO didn't weigh in on the earnings release.
Meritage's Steven Hilton:
"The market has obviously softened since the federal home buyer tax credit expired in April last year, as reflected in total U.S. home sales as well as our own sales and closings. As a result, we have offered larger incentives in some of our communities, resulting in lower margins that offset the improvements we are achieving in our new higher-margin communities...the spring selling season for the last few months is off to a tepid start, and we have not produced sales at the pace we would have hoped this far into the 2011 selling season. We believe the housing market in general is still bouncing along the bottom, with pockets of strength in certain of our markets."
Translation, We're lowering prices, throwing in upgrades, and it's not really working.