It seems that about the best we can do these days is lump the builders' performances into bins labeled "weak," "weaker," or "weakest." On that basis, it seems that two from the Northeast, Toll Brothers
Toll, which is located near Philadelphia and is the nation's major builder of luxury homes, squeezed out a loss of $93.7 million in its second quarter. That amounted to $0.59 a share, compared with a profit of $36.7 million, or $0.22 a share, a year earlier. The primary culprit in the quarter was $288.1 million in pre-tax write-downs, about 30% of which related to joint ventures. Absent the charges, the company would have earned $81.3 million, or $0.49 per share.
Hovnanian, on the other hand, lost $340.7 million, or $5.29 per share, in its second quarter, compared with a loss of $30.7 million, or $0.49 a share, last year. The New Jersey company's land-related charges and write-offs for the period totaled $251 million. Without the charges, the loss would have been $92.4 million.
So things continue to slide for the pair of builders and their brethren. In fact, net contracts at Toll Brothers were down by 44% on a unit basis, and the average price was nearly 25% lower than a year ago. In contrast, Hovnanian's non-joint-venture net contracts were off by 29% year over year, and the average price slid by 17%.
These aren't the worst or the hardest-hit of the builders. That role, as my Foolish colleague Anand Chokkavelu indicated earlier this year, probably belongs to Atlanta-based Beazer
First, as management noted, the industry appears to be "going back to Mortgage Lending 101" -- i.e., conservatism. That's good, since a recovery depends first on a return to mortgage sanity. But second, the company noted that even in Texas -- its strongest market -- sales have slowed as negative media comments on housing have affected consumer confidence. That's bad, since what's being attributed to the media probably also reflects the fact that prospective homebuyers tend to purchase gasoline as well.
So we'll await results from other builders, including Lennar