IF THE LATEST FIGURES FOR PUBLIC BUILDERS are any indication, builders are off to a gangbuster start this year. The public builders set multiple records and outperformed earnings expectations, according to recently reported first-quarter results.
Meritage led the group among top volume builders in revenue growth, 49 percent year-over-year for the quarter. William Lyon Homes reported more than tripling its quarterly sales, a fourth of which resulted from joint venture sales that now must be consolidated under new accounting rules. Eight companies reported in excess of 50 percent net income growth year-over-year, including Standard Pacific (71 percent), Meritage Corp. (70 percent), MDC Holdings (65 percent), Centex (53 percent), and Pulte (53 percent).
New orders and closings remained strong. Technical Olympic enjoyed a 73 percent increase in orders followed by WCI Communities (66 percent), Orleans (59 percent), and Hovnanian (50 percent). D.R. Horton led the industry in closings for the first quarter with 9,853, a 25 percent jump, and were followed by Centex and Pulte. William Lyon virtually doubled it deliveries over the prior year for the period, including joint venture results.
All but one company reported year-over-year improvement in the diluted earnings per share (EPS). A share in Meritage earned 67 percent more than a year ago, followed closely by a share of Standard Pacific (61 percent) and MDC (60 percent).
Most builders attributed their excellent performance to markets that remained healthy across the U.S. and continued low interest rates, although several noted that many equity investors apparently are concerned about the potential for rising interest rates.
Steven J. Hilton, co-chairman and co-CEO of Meritage, said: “Our optimism is based on the low absolute level and diminished swings in interest rates, a broadened array of mortgage products available to our buyers, and the constrained supply of land that limits overbuilding and benefits larger builders with strong financial resources.”