After three fiscal quarters of 2012, it’s clear that a recovery in home building is underway, at least for the large publicly traded home builders who are required to share their business with the world.
Whether business will continue to improve, and what the pace of forward (or backward) movement will be remain in question, but there are enough positive past quarters to have the CEOs optimistic that better times are ahead, barring a financial meltdown.
Most executives don’t expect the recovery to follow a swift upward trajectory, however, because there are still too many drags on the economy, including tepid improvement in the jobs market, worries about the fiscal cliff, foreign government woes, and the remaining questions about the market for mortgages.
A look at the 13 largest public builders’ results offers a peak at how strong the rebound has been through September 30.
New orders were up on average of 31.7% for the 13 builders. M.D.C. Holdings, which had been lagging behind its peers for a few quarters gets the “most improved” title. It had the largest quarterly orders leap, up 69.4%, and closings leap, up 46.9%.
KB Home was at the end of the new orders chain, posting only a 3.4% increase in orders for the quarter and a sparse 0.16% improvement for the fiscal year.
The average quarterly closing percent increase among the group was 24.7%. The closing king for the quarter and fiscal year was Meritage Homes, up 42.5% for the third quarter and 141.5% for the year so far.
The most challenged in the closing department was PulteGroup, up 5.2% for the quarter and 3.5% for the year
On average, profits were up by more than 180% for both the third quarter and the first three quarters compared to the same time frames in 2011 among the group. Standard Pacific led the quarterly improvement with a 437% hop. Lennar was the leader for year-to-date profitability with an improvement of 796%.
Profitability for Beazer Homes USA remained elusive. It lost $60 million in the quarter and $135.6 million for its fiscal year that ended September 30. KB Home managed to squeak to profitability for the quarter, earning $3.3 million but it lost $66.7 million over the last three quarters, becoming one of only two builders among the 13 who failed to post a profit for the first nine months.
Teresa Burney is a senior editor for Builder magazine.