Pulte Homes, No. 3 in the 2006 BUILDER 100 says it expects to report big losses for the second quarter of 2007, estimating a loss of $2.00 to $2.10 per share from continuing operations. The Michigan-based home builder joins a number of other large public companies, such as D.R. Horton, Lennar, and KB Home who have recently reported quarterly losses.
"The difficult conditions that plagued the homebuilding industry in the first quarter of 2007 worsened in the second quarter, with increased competitive pricing pressures, elevated levels of new and resale home inventory, and weak consumer sentiment for housing affecting the entire industry," Richard J. Dugas, Jr., president and CEO of Pulte Homes said in a released statement on Wednesday. "Our strategy of maintaining a healthy balance sheet through properly managing house and land inventory levels along with dramatically lowering SG&A costs continues to be our focus during this challenging operating environment."
According to Mark Vitner, senior economist for Wachovia, the reported losses for public companies coincide with his forecast that the bottom is near. "The builders are all taking their lumps," he told BUILDER Online Wednesday morning.
Pulte Homes is also reporting that impairments and land-related charges are in the range of $740 million to $770 million for the quarter. The impact of a $40 million restructuring plan designed to reduce costs was also felt by the company.
Net new orders for Pulte are down 20 percent compared with the second quarter of 2006 and the company closed 5,938 units during the quarter, a 40 percent decrease from 2006. In addition, there is 14,928-unit backlog at the end of the second quarter 2007, valued at $5.2 billion. The company saw its average sales price per home drop four percent to approximately $320,000.