NVR's results for the quarter that ended September 30, 2007 were down. But they weren't as bad as analysts suspected.

The company's net income for the 2007 third quarter was $91.1 million, $15.26 per diluted share, compared to net income of $129.3 million, $19.63 per diluted share, for the same period of 2006. The builder's diluted earnings per share fell 30%, while its net income fell 22% compared to 2006's third quarter.

But that's better than the $8.44-per-share estimate projected from Banc of America Securities. "Upside to our estimate came primarily from better-than-expected margins before option writeoffs and a reversal of $31.5 million previously recorded stock-based compensation expenses, partially offset by higher-than-expected option write-offs and slightly lower revenues," Banc of America Securities said in a research report on NVR.

Land-deposit impairments of approximately $96.5 million pulled down NVR's third-quarter results. The land impairments lowered gross margins by 760 basis points and reduced diluted earnings per share by $9.88. Consolidated revenues for the third quarter of 2007 totaled $1,292,088,000, a 17% decrease from $1,553,411,000 for the comparable 2006 quarter.

There were some other positives in the third quarter. NVR's new home orders increased 12% to 2,660 units, when compared to 2,378 units in the third quarter of 2006. This was higher than Banc of America Securities projection of a 13% decline. Tightening credit standards did slow the sales pace in August and September.

Although sales were up compared to the third quarter of 2006, NVR's average order price declined. The average new-order price in the third quarter of 2007 decreased 9% to $330,100 compared to $362,500 in the third quarter of 2006. The cancellation rate in the quarter was 27% compared to 27% in the third quarter of 2006 and 16% in the second quarter of 2007. The Washington, D.C. cancellation rate in the quarter was 44% compared to 39% in the third quarter of 2006 and 21% in the second quarter of 2007.

NVR's settlements decreased in the third quarter of 2007 to 3,476 units, 10% less than the same period of 2006. Its homebuilding revenues for the quarter totaled $1.3 million, 17% lower than the year earlier period. Income before tax from the homebuilding segment totaled $129,000,000 in the 2007 third quarter, a decrease of 34% when compared to the third quarter of the previous year.

Land-deposit impairments and pricing pressures pushed NVR's gross profit margins down to 14.4% in the 2007 third quarter compared to 19.0% for the same period in 2006. The Company's backlog of homes sold but not settled at the end of the quarter decreased on a unit basis by 4% to 7,071 units and 14% on a dollar basis to $2.7 million when compared to the same period last year.