More Homebuilder pain

From Bloomberg:

Pulte Reports Loss on Writedowns, Tumbling Home Sales

Pulte Homes Inc., the third-largest U.S. homebuilder, reported a third-quarter loss after it reduced the value of its real estate and potential buyers of its homes had difficulty obtaining mortgages.

The net loss in the three months ended Sept. 30 was $787.9 million, or $3.12 a share, compared with net income of $190.2 million, or 74 cents, a year earlier, Bloomfield Hills, Michigan- based Pulte said today in a statement. Revenue fell 31 percent to $2.5 billion. The company wrote down the value of its assets by $1.18 billion in the quarter.

"The operating environment continues to be challenged with elevated levels of new and resale home inventory, tightening of mortgage liquidity, and weak consumer sentiment for housing,'' Richard J. Dugas Jr., the company's chief executive officer said in the statement.

Pulte was projected to have a net loss of $1.25 a share, according to the average estimate of analysts in a Bloomberg survey.

Orders for new homes fell 37 percent to 4,582, and the company had a backlog of 12,042 homes, worth $4.1 billion, it reported. A year earlier, the backlog reached 16,375 homes.

The company said it closed on sales of 7,468 homes in the quarter, a 28 percent decrease over the same period a year earlier. The average sales price per home fell 4 percent to $322,000 over the same period.

The company said it took impairments and land-related charges of $842 million and a goodwill impairment of $336 million in the quarter.

For the fourth quarter, the company said it projects income from continuing operations to range from break-even to 10 cents per share. It said it could not offer any guidance into next year.

Shocker of a result but notice they have managed to shift some inventory. Aslo yesterday:

Ryland Reports Loss on Writedowns and Slower Sales
Ryland Group Inc., a U.S. homebuilder targeting first-time buyers, reported a third-quarter loss on falling sales as mortgage terms made it harder for potential buyers to purchase homes.

The net loss in the three months ended September 30 was $54.7 million, or $1.30 a share, compared with net income of $87.9 million, or $1.97, a year earlier, the Calabasas, California-based company said today in a statement on Business Wire. Revenue fell 35 percent to $732.3 million....

Analysts expected Ryland to report a third-quarter loss of $1.29 a share, according to the average of nine estimates compiled by Bloomberg.

New orders declined 20.9 percent to 1,876 units, and the inventory of homes started and not yet sold declined 21.9 percent to 1,362 units. The company wrote off $128.1 million after adjusting the value of its inventory.

Ryland amended its unsecured revolving credit facility and reduced its aggregate debt to $750 million from $1.5 billion, the company announced Oct. 17.

Again if there is any positive news here it is that inventories are being worked off. Inventories should continue to flatten out as the summer selling season is now over.