The company's Mid-Atlantic and Midwest operations inflicted the most heartburn with Mid-Atlantic sales down 47% during the fourth quarter and Midwest sales down 45%.
Overall, fourth-quarter contracts fell to 322 from 353 the previous year, and the company delivered 1,042 homes during the quarter, down 24% from the previous year. For 2007, 3,288 homes were delivered compared to 4,109 in the previous year. Sales value of the homes in backlog at year-end was $233 million. Average sales price for the year fell by $38,000 to $312,000.
Fourth-quarter land sales and home deliveries bolstered the overall financial position of the company as it continues to operate in defensive mode in preparation for a challenging 2008.
"At the beginning of 2007, we owned 19,400 lots and had $410 million outstanding under our home building bank line. Our fourth quarter land sales and homes deliveries were instrumental in reducing our owned lots by more than 25%, and we ended the year with bank borrowings of $115 million," said CEO Robert Schottenstein in a statement.
Last week, M/I announced its exit from the West Palm Beach, Fla., market. The sale of the company's entire portfolio of developed lots and inventory homes in Palm Beach and Martin Counties was sold to Kolter Land Partners in an all-cash transaction for a purchase price of approximately $45 million.
The sale includes land and homes in four communities, though more than 50% of the assets were located in the Palm Beach garden community of Paloma. "These are premium properties, but with the environment today and the market's expensive and long approval process, this is a tough place to be a public home builder," said Jim Harvey, president of Kolter's Eastern division.
Extricating itself from West Palm Beach will inflict a fourth quarter pre-tax impairment charge of $44 million associated with inventory and other market assets. M/I also estimated another $1 million of charges in relation to one-time termination benefits.
Through Dec. 28, the company completed sales of another 3,200 lots and raw ground in other parts of Florida as well as North Carolina and Washington, D.C., to various buyers for an additional $37 million.