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Homebuilders optimistic about market

Posted: July 1, 2012 1:30 a.m.
Updated: July 1, 2012 1:30 a.m.

Declaring that the homebuilding industry may finally be in the early stages of recovery, Ara K. Hovnanian, chairman of the board, president and CEO for Hovnanian Enterprises, said the company has seen four consecutive quarters of year-over-year net contract growth for the first time since 2006.

Based on the quarterly reports being issued by homebuilders, it appears many homebuilders are experiencing similar growth patterns years after the industry first slumped.

Even privately held smaller builders believe the industry is slowly recovering. Traffic and sales for June were up at all Williams Homes properties, and business is the best it’s been in six years, according to Lance Williams, president of  the Santa Clarita-based homebuilder.

Here’s a look at the highlights compiled from quarterly reports of companies that have built locally in the Santa Clarita Valley.

KB Homes
KB Home reported revenues totaling $302.9 million were up 11 percent in the second quarter of 2012 over the same quarter in 2011. Homebuilding revenues also posted year-over-year growth, with revenues up 24 percent in the West Coast region.

The Los Angeles-based builder reported a year-over-quarter increase of 9 percent with an average selling price of $233,000, and West Coast increases  in particular of 33 percent.

For the six months ending May 31, KB Home delivered 10 percent more homes compared to the same period a year earlier with the average selling price increasing 8 percent. Revenues in the same period were up 19 percent, totaling $557.4 million.

“We generated a year-over-year increase in our average selling price for the eighth consecutive quarter,” said Jeffrey Mezger, president and CEO.

Lennar Corp.
Homebuilder Lennar reported a 20-percent increase in homes delivered for the second quarter 2012 over the same period last year.

New orders for homes were up 20 percent in the period, and revenues rose 22 percent over the second quarter of 2011 to $930.2 million. Lennar reported its operating margin increased over 100 percent to 9.2 percent, its highest margin percentage since the second quarter of 2006.

In a six-month span ending May 31, Lennar reported an increase in home sales of 27 percent over the same period in 2011. Sales prices increased only 2 percent to $248,000.

“Evidence from the field suggests that the ‘for sale’ housing market has, in fact, bottomed and that we have commenced a slow and steady recovery process,” said Stuart Miller, CEO of the Lennar Corp.

D.R. Horton Inc
For builder D.R. Horton, whose second quarter ended in March 2012, the company reported an increase o 28 percent in homebuilding revenue totaling $935.6 million.

The number of homes closed increased 21 percent compared to a year ago. And net sales orders for the second quarter ended March 31 increased 19 percent from the same period a year ago.

Homebuilding revenue for six months ending March 31 increased 21 percent to $1.8 billion from the same period in the prior year. And the number of homes sold increased 17 percent.

“Each of our regions reported increases in sales and pre-tax income compared to last year,” said Donald R. Horton, chairman of the board.

Pardee Homes
Specific results for Los Angeles-based Pardee Homes, which operates as a subsidiary of Weyerhaeuser Real Estate Co., are not available but Weyerhaeuser did forecast how its real estate segment would perform in its second quarter which ended June 30. The company’s second quarter report is not available until July 27.

Weyerhaeuser expects to realize a slight profit from its real estate segment in the second quarter due to a land sale completed in April 2012, which will contribute approximately $10 million to earnings. The company, however, anticipates a small loss from single-family homebuilding operations in the second quarter but believes home sales will increase seasonally.

Meanwhile, even though home sales have been steadily rising on a national level and in Santa Clarita, recovery continues to be uneven in different areas of the country.

Mezger of KB Home said it’s still a mixed new home housing environment that while improving, there is still an uneven recovery in housing markets and softening economic and employment trends.

And although homebuilding is showing increased activity, the May data for employment in the construction field shows employment nationally declined by 28 percent in May.

While unemployment did drop almost 2 percent from a year ago, still it remains higher than levels for the general population at 14.2 percent, according to the U.S. Bureau of Labor Statistics.

However, the department reported job losses as being greater in specialty trade contractors and heavy and civil engineering construction. Numbers for homebuilding jobs specifically are not available.

Highly conservative mortgage lending practices and challenging appraisals remain as a “constant headwind,” said Miller of Lennar Corp.


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