The word "challenging" continues to be spread around the homebuilding industry like butter on breakfast toast. And why not? Just this week, three homebuilders said they'd managed to lose a combined $851 million in the most recent quarter. And a fourth, Toll Brothers, pre-released (your guess is as good as mine why) preliminary numbers report indicates that it'll have a similar tale of woe for us when its final numbers are finally disclosed.
But if any of my Foolish friends are of a mind to assume that the bloodletting is about over, I'll point out that the four companies' shares declined an average of 11.4% in the relatively short span between the first day of this month and Thursday's close, not quite a week later. So, be patient Fools, be patient.
By way of recap, let's look ever so quickly at the four builders in question and at their respective results:
First up: Standard Pacific
California-based Standard Pacific
Without those charges, the company would have been $0.07 a share in the black. But most of the company's activity numbers continued to head south. And as CEO Stephen Scarborough told us, "As we enter 2008, we anticipate that housing market conditions will continue to weaken, resulting in a decrease in companywide deliveries."
And then M.D.C.
As you'd likely expect, the company's operating numbers also reflected continuous declines. For instance, closings in the quarter fell 39% to 2,200 units, and net new orders slid by more than 50%.
Followed by D.R. Horton
Texas-based D.R. Horton
As the company's founder Donald Horton said, resorting to what's fast becoming homebuilding's go-to word: "We expect the housing environment to remain challenging."
Finally, Toll Brothers
Robert Toll's company builds more expensive homes than do most of the public companies, although the average was lowered by 13% from a year ago to $634,000. Despite catering to a more upscale market, Toll is "not yet seeing much light at the end of the tunnel."
The three companies that actually reported did far better than the trio of Meritage
And even though many of the builders are laboring mightily (and most successfully) to strengthen their balance sheets and shore up their liquidity -- housing's recovery will ultimately have little to do with what they do. As I've told Fools in the past, until our chaotic and dysfunctional mortgage lending world is discharged from intensive care, the homebuilders themselves will continue to require oxygen.
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Blessedly, Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned above. He does welcome your questions or comments. The Fool is proud of its well-built disclosure policy.