NVR, one of the few public builders that's still reporting positive earnings, made a lot less in the three months ended Sept. 30 than it did in the same period a year ago. The Reston, Va.-based builder reported that its quarterly profit fell 30.8 percent, to $91.1 million, on sales of $1.27 billion that were off 16.9 percent. Through the first nine months of its fiscal year, NVR's revenue fell 17.9 percent to $3.64 billion, and its net income plummeted 41 percent to $266.7 million.
The continued downturn in buyer demand had an odd positive impact on the builder's profit in its latest quarter, as NVR stated it would not achieve performance levels this year that allow for 411,000 outstanding stock options to be exercised, and therefore was able to reverse $31.5 million in costs it had already booked on its balance sheet. Ironically, NVR's new orders actually rose 12 percent (to 2,660 units) in the quarter, although the company attributes this gain to a weak comparable three months last year. NVR's stock price, which gained 3 percent on Friday after the company released its results, at 12:30 this afternoon was trading nearly 12 percent higher, at $481.14 per share.
Home prices and sales, though, continue to be problematic, as NVR's average new-order price in the quarter was down 9 percent to $330,100, its average settlement price fell nearly 8 percent to $365,100, and its cancellation rate was 27 percent, the same as it was in the third quarter of 2006. In one of its key markets, Washington, D.C., NVR's quarterly cancellation rate was 44 percent.
The builder, which has one of the most conservative land positions of any major builder, pruned that position even further to where, at the end of nine months it controlled 79,700 lots, or 18.6 percent fewer than a year ago. In its latest quarter, NVR whittled its community count to 506, from 609 in the same period in 2006. The company stated that land impairments, which for the quarter totaled $96.5 million, took a 7.6 percent bite out of its quarterly gross margin, which softened to 14.4 percent of sales, from 19 percent in the same quarter last year.
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