By Alex Veiga
AP Real Estate Writer
LOS ANGELES (AP) -- Summer's gone, but the worst housing demand homebuilders have seen in decades is dragging into the fall.
PulteGroup Inc. said Wednesday the lackluster demand trends the homebuilder saw in the July-September quarter extended into last month, and the company is planning for challenging industry conditions to continue.
"What we saw in the third quarter was an industry where demand continued to move along the bottom as buyers elected to remain on the sidelines," said Richard Dugas, the builder's chairman, president and chief executive.
The company, which posted a wider third-quarter loss because of hefty charges, said its new home orders slid 12 percent from a year ago and roughly 15 percent since the second quarter.
Shares in the Bloomfield Hills, Mich., company tumbled 62 cents, or 7.7 percent, to $7.45 in afternoon trading.
The builder's results highlight concerns that the housing market slide that began after federal homebuyer tax credits expired in April is far from over. Absent the government incentives -- and despite mortgage rates remaining at near-historic lows -- many would-be homebuyers are balking, put off by high unemployment, tight credit and uncertainty about home prices.
The U.S. said last month that home sales rose 6.6 percent from August to September, but the May-September period still clocked in as the worst for new home sales on records dating back to 1963.
In the midst of that decline in demand, several large homebuilders have reported, on average, a 30 percent annual decline in new home orders for the July-September quarter.
Last week, builder Meritage Homes Corp. said orders were down 36 percent from a year ago, while Ryland Group Inc. reported orders were down 37 percent.
PulteGroup said it will continue to cut direct construction and overhead costs and will lower its 2011 selling, general and administrative spending by about $100 million as it deals with softness in the housing market.
The builder, which has operations in 29 states and the District of Columbia, said it lost $995.1 million, or $2.63 per share, for the three months ended Sept. 30. That compares with a loss of $361.4 million, or $1.15 a share, in the prior-year period.
Removing charges totaling $2.60 per share for goodwill impairment, construction and other items, PulteGroup lost 3 cents per share.
The current quarter's numbers include results from Centex Corp., which was acquired in August 2009. The year-ago period's results were not adjusted to account for the Centex transaction.
The result was better than the loss of 5 cents per share that analysts surveyed by Thomson Reuters expected. Analysts' estimates normally exclude one-time items.
Revenue dipped 3 percent to $1.06 billion from $1.09 billion, but beat Wall Street's $1.04 billion.
Standard & Poor's analyst Ken Leon downgraded the builder's stock to a "Hold" from a "Buy," and lowered his 2011 earnings per share estimate to 15 cents from 40 cents and his 2010 estimate to a loss of $2.50 a share from a profit of 10 cents a share, citing an assumption that the builder is in for weak growth ahead.
PulteGroup said revenue from home sales fell 3 percent on a drop in unit closing volumes, which was somewhat offset by a 5 percent rise in average selling price to $365,000.
Net new orders totaled 3,566, down 15 percent from the second quarter's 4,218 orders. They were down 12 percent from 4,048 a year earlier.
However, adding in the home orders Centex had last year, the decline versus a year ago would be a steeper 31 percent on 17 fewer communities.
Management said homebuyer demand held up relatively well in the builder's Northeast, New England, Atlanta and Nashville markets, with Texas and Florida markets performing best. Demand was weakest in Midwest and Southwest markets, particularly in Las Vegas, Phoenix and St. Louis.
Published: Fri, Nov 5, 2010
