Tags: D.R. Hortons New Home Orders Fall More Than 20 Percent

D.R. Horton's New Home Orders Fall More Than 20 Percent

Friday, 12 Nov 2010 01:23 PM

D.R. Horton Inc., the biggest U.S. homebuilder, said 2011 would be another tough year for its battered industry, with no hope for a boost from the spring selling season, sending its shares down as much as 5 percent.

The company said it would sell fewer homes in 2011 than it did in 2010 as new home orders fell 20.5 percent to 3,979 homes in its fourth quarter. It also took $30.8 million in land charges, a sign it sees lower demand than it first anticipated.

"We're not projecting a huge spring bump," Chief Executive Officer Donald Tomnitz told analysts and investors on a conference call. "I just don't see a lot of hope for a great spring market."

Horton's fourth-quarter loss and pessimistic outlook on the economy indicate the housing slump that began in 2007 with a wave of defaults on subprime mortgages will stretch on for yet another year, despite hope that the federal home-buyer tax credit would show the industry a way out.

"Fiscal 2010 was the year of the tax credit," Tomnitz said on the call.

Now the boost from the credit is looking short-lived. Land charges ticked up for rivals The Ryland Group Inc. and PulteGroup Inc. as builders anticipate a renewed struggle to sell homes to consumers still rattled by high unemployment. Horton's were roughly flat with last quarter's.

"We expect another very challenging year for the homebuilding industry as the fundamental drivers of demand, the overall economy, job growth, and consumer confidence, are still very weak," Tomnitz said.

Pending home sales fell 1.8 percent in September from August and will probably fall further in October as foreclosure moratoria caused by faulty paperwork disrupt October sales, wrote Wells Fargo analyst Carl Reichardt in a note to clients.

"There's a new baseline of demand that many homebuilders are forecasting following the expiration of the tax credit," said Morningstar analyst Mike Gaiden. "As they look out, their future expected earnings from their current development portfolios are now forcing them to take impairment (charges)."

The company said Friday its loss had narrowed to $8.9 million, or 3 cents per share, in the fourth quarter ended on Sept. 30 from $234.9 million, or 74 cents per share, a year earlier.

Analysts on average were expecting a loss of 4 cents per share, according to Thomson Reuters I/B/E/S.

Homebuilding revenue slid to $925.7 million from $1 billion.
Horton's shares were down 4.8 percent at $11.59 in afternoon trading on the New York Stock Exchange compared with a 3.0 percent dip in the Dow Jones U.S. Home Construction Index.

Rivals Pulte, the number two builder and Lennar Corp., the number three, were also down, 4.3 percent and 2.9 percent, respectively.

© 2017 Thomson/Reuters. All rights reserved.

   
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D.R. Horton Inc., the biggest U.S. homebuilder, said 2011 would be another tough year for its battered industry, with no hope for a boost from the spring selling season, sending its shares down as much as 5 percent. The company said it would sell fewer homes in 2011 than...
D.R. Hortons New Home Orders Fall More Than 20 Percent
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2010-23-12
Friday, 12 Nov 2010 01:23 PM
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