It is late in this weeks' match of first-quarter-earnings reports among large, publicly traded home building companies, and the losers are winning, 5 to 4.
So far, Beazer, Pulte, Standard Pacific, Ryland and M.D.C. have come up short, with losses ranging from $24.4 million at Ryland to $94.4 million at M.D.C. In aggregate, the losses total considerably more than a quarter-billion dollars.
NVR, M/I, Meritage Homes and D.R. Horton managed to make money, but earnings were way off at Horton and M/I and were at least better than expected at NVI and Meritage. If there was an indicator of how earnestly the investment community is hoping for a turnaround, it came on Thursday, as the home building stocks jumped ostensibly on a comment from Meritage CEO Steven Hilton, who said during a conference call, "We believe the worst is behind us." Never mind that he also said that "April started out kind of slow" and that, regarding a market turnaround, "Nobody knows when this will occur, but most agree that it will occur."
A more sober view came from JMP Securities Analyst Alex Barron, who said in a research note, "Based on sales trends in April and cautious commentary from other builders, we believe this bullishness is premature."
More typical comments came from Ian McCarthy, Beazer's CEO, who said, "The sales environment continues to be very difficult" and that "we have yet to see any evidence that a sustainable" recovery is at hand." He also said, "April has not started out as a strong month," and he added, "The lenders are quite rightly being careful."
At Pulte Homes, executive vp and COO Steven Petruska said during the company's conference call that "the anticipated recovery seems to be a moving target at best." Regarding the spring selling season, he said, "Normally we see some increase [in home sales]. We didn't see that."
While there was some indication in the builder earnings reports and in the latest new home sales data that conditions were improving in the Northeast and perhaps the Mid-Atlantic Region, those regions were the first to dive and are facing easier comparisons with last year. Standard Pacific said it was seeing some firming up in California, but analysts believe that have more to do with a higher price point than the overall market. At most of the other builders, California, Florida, Phoenix and Las Vegas continue to be depressed.
In a research note on the Ryland Group results, Ivy Zelman and the home building team at Credit Suisse put it this way: "With the company unwilling to discuss trends thus far into April, we expect that conditions, at best, have not improved , and may have deteriorated further into spring, which will likely continue to pressure pricing and margins and leaves the door open for further impairment risk."
To cap the week off, the Commerce Department reported that GDP growth slowed to 1.3%, the slowest rate in four years. It blamed the housing slump.
Learn more about markets featured in this article: Las Vegas, NV.