Some major home builders rode out mild slumps during a period of interest-rate gains and are now enjoying stock-price stabilization or growth as interest rates have crept back down. Housing starts are up 8.3 percent nationwide from June 2004 to July 2004, and building permits are up 5.7 percent, the U.S. Census Bureau and U.S. Department of Housing and Urban Development reported today, which is good news for the building industry.
Pulte Homes Inc.’s stock dropped quickly in April and May but has since rebounded, reaching a record-high of $58.91 on Monday. In September, Pulte’s stock dipped to $31.84, which was the low point for the past year. Pulte reported total revenue of $2.52 billion in the period ending June 30, 2004, compared with $2.04 billion for the period ending March 31, 2004. And gross profit was at $736 million in the second quarter, compared with $226.5 million in the first quarter.
Pulte has operations in 44 U.S. markets in 27 states, and also has international home-building operations in Mexico, Puerto Rico and Argentina. Pulte reported 8,480 housing-unit settlements in the second quarter of this year, compared with 7,112 in the second quarter of 2003. Pulte’s Western operations accounted for 3,350 of these unit settlements. And net new orders for housing units reached 10,776 in the second quarter of this year, compared with 9,191 in the second quarter of 2003. Again, Pulte’s Western region (which includes operations in Arizona, California and Nevada) was a leader in this category, with 4,440 net new orders for units.
The Greater Phoenix housing market, alone, represented 17.9 percent of Pulte’s U.S. net new orders for units, 15.6 percent of unit settlements and 13.1 percent of settlement revenues in the second quarter of this year. Las Vegas, one of the hottest housing markets in the nation, is also a major market for Pulte.
The average sales price of a Pulte-built home increased from $259,000 in the second quarter of 2003 to $282,000 in the second quarter of 2004. “Changes in average unit selling price reflect a number of factors, including changes in market selling prices, primarily in the West, and geographic and product mix,” Pulte reported.
Pulte’s unit backlog – orders for homes that have not yet closed – grew to a record 19,960 units for this year as of June 30, 2004, compared with 15,199 units in the first half of 2003. And the dollar value of this backlog jumped from $4.24 billion as of June 30, 2003, to $6.27 billion as of June 30, 2004.
For home builder Centex Corp., the slide in its stock price began in April and continued through late July, though now the company’s stock has been headed back up. Over the past year, the company’s stock hit a low of $35.58 in September and a high of $58.40 in March, closing at $45.12 on Monday.
For the quarter ended June 30, 2004, revenues increased 27 percent to $2.8 billion and earnings from continuing operations increased 42 percent compared with the second quarter of 2003, the company reported. Housing revenue was at $1.97 billion in the second quarter of this year, up 38.3 percent from the second quarter of 2003.
The average unit sales price of a Centex-built home increased from $232,700 in the second quarter of 2003 to $253,600 in the second quarter of 2004, according to the company’s quarterly report. Sales orders “were particularly strong in the Southeast and West Coast regions,” the company reported, and totaled 9,031 units for the quarter, up 7.4 percent over the second quarter of 2003. Home closing volume increased 16.3 percent from the second quarter of 2003 to the second quarter of 2004, the company also reported, and totaled 7,383 homes in the second quarter of 2004.
“Strong housing market conditions, combined with our geographic, product and segment diversification strategies, continued to drive higher average selling prices,” the company reported. As of March 31, Centex had homebuilding operations in 45 of the 50 largest housing markets in the country.
KB Home reported a revenue record of $1.57 billion for the second quarter ending May 31, 2004, up 9 percent from the $1.44 billion reported in the second quarter of 2003. Net income was at $102.1 million in the second quarter of this year, up from $74.2 million in the first quarter. And gross profit was at $380.1 million in the second quarter, compared to $310.3 million in the first quarter.
As with other publicly traded home builders’ stocks, KB’s stock dropped off in April and May. Since then, the stock has roughly stabilized and remains higher than it was last year. Over the past year, KB’s stock has fluctuated between a low of $53.87 and a high of $81.89, and closed at $66.44 on Monday.
The average selling price of a KB-built home increased 2.2 percent, from $216,800 to $212,200, from the second quarter of 2003 to the second quarter of 2004. Revenue was up most dramatically in KB’s Southeast region. The company reported a 29.6 percent gain in Southeast housing revenues from the second quarter of 2003 to the second quarter of 2004, from $148.2 million to $192 million.
And housing revenue in KB’s Southwest region jumped 27.3 percent, from $283.7 million in the second quarter of 2003 to $361.2 million in the second quarter of this year.
The average selling price of a home in the company’s West Coast region grew 12.1 percent, from $356,400 to $399,500 in that time. “In both the West Coast and Southwest regions, high demand for housing combined with constrained housing supply continued to support higher prices,” the company reported.
In the company’s Central region, though, the average selling price dropped from $152,300 in the second quarter of 2003 to $147,400 in the second quarter of this year.
Home builder D.R. Horton Inc.’s stock has mirrored the general pattern exhibited in several builders’ stocks this year, with a low of $19.01 in August 2003, a high of $36.50 in March 2004, and a roughly stable stint since a drop-off in April and May. The company’s stock closed at $29.13 on Monday. D.R. Horton’s home sales revenue increased 27.8 percent from the second quarter of 2003 to the second quarter of this year, from $2.12 billion to $2.7 billion.
Gross profit from home sales jumped 40.7 percent from the second quarter of 2003 to the second quarter of 2004, from $432.6 million to $608.7 million. D.R. Horton is the largest home builder in the U.S. based on domestic homes closed in 2003. The company builds and sells single-family homes in 51 markets and 21 states through its 41 home-building divisions.
“Our revenue growth and margin improvements resulted in a 58.3 percent increase in net income and a 51.7 percent in diluted earnings per share for the nine months ended June 30, 2004,” the company reported.
D.R. Horton has 12,444 new sales orders for the second quarter ending June 30, 2004, compared to the 10,811 net new sales orders in the second quarter of 2003.
The average selling price of a D.R. Horton-built home increased 6.7 percent, from $242,200 in the second quarter of 2003 to the second quarter of 2004. Average selling prices rose 15.7 percent, from $195,900 to $226,600, in the company’s Southeast region from the second quarter of 2003 to the second quarter of this year, and rose 14 percent, from $226,900 to $258,600, in the company’s Mid-Atlantic region. That compares with a 0.9 percent gain in the selling price in the company’s Midwest region in that time.
Lennar Corp.’s stock was slammed in April and May of this year after peaking at $56.98 in March, and has since leveled off in the $42-$45 range, closing at $43.71 on Monday. The stock’s low point of the past year was $32.66 in August 2003.
Lennar’s total revenue for the second quarter ending May 31 was $2.34 billion, up from $1.86 billion in the first quarter of the year and $2.1 billion in the second quarter of 2003. Gross profit dropped from $432.4 million in the first quarter of this year compared with $118.8 million in the second quarter, while operating income improved from $200.4 million in the first quarter to $290.9 million in the second quarter, and net income increased from $139.3 million in the first quarter to $201.4 million.
“Revenues were higher due primarily to (increases) in the number of new-home deliveries and (increases) in the average sales price of homes” in the first half of the year compared with the first half of last year, the company reported. “New home deliveries were higher in each of our regions compared to 2003.”
The average sales price of a Lennar-built home increased from $257,000 in the second quarter of 2003 to $266,000 in the second quarter of 2004.
New orders for homes totaled 11,465 in the second quarter of this year, compared with 9,798 in the second quarter of 2003, the company reported, and increased from 3,588 to 4,387 in the company’s Western region from the second quarter of 2003 to the second quarter of this year.
The number of home deliveries increased from 7,571 to 7,927 in that time, Lennar reported, and the backlog of homes grew to 19,417 in the first half of this year, compared with 15,605 in the first half of 2003. The backlog dollar value of Lennar sales contracts was at $5.86 billion as of May 31, 2004, compared with $4.22 billion as of May 31, 2003. This backlog growth was related to home-building acquisitions, “which resulted in higher new orders in the second quarter of 2004,” the company reported.
***
Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.
