by Calculated Risk on 1/30/2014 07:35:00 PM

From economist Tom Lawler:

Below is a summary table of some stats from large publicly-traded builders who have reported results for last quarter. Note that for the six builders in the table, “home sales” based on net orders in 2013 were up 5.7% from 2012, while “home sales” defined as closed sales were up 20.1% on the year.

The combination of higher mortgage rates and unusually aggressive home price increases in many parts of the country led to a substantial dip in new home contract signings in the second half of last year.

Most builders expressed considerable optimism about the prospects for home sales in 2014, and are planning accordingly, and most increased significantly their land/lot positions over the last year or two. Most builders also reported gross margins in the last quarter of 2013 that were at or near seven year highs. The combination of elevated land/lot positions and elevated margins suggests that any slower-than-expected pace of home sales would likely lead to little or no home price growth in 2014.

Builder results reported so far suggest that Census’ new home sales estimates for the fourth quarter of 2013 are likely to be revised downward.

M/I Homes reported that net home orders in the quarter ended December 31, 2013 totaled 793, up 17.8% from the comparable quarter of 2012. M/I’s average community county last quarter was up 16.9% from a year earlier. The company’s sales cancellation rate, expressed as a % of gross orders, was 19% last quarter, down from 21% a year ago. Home deliveries totaled 1,120 last quarter, up 26.3% from the comparable quarter of 2012, at an average sales price of $292,000, up $273,000 from a year ago. The company’s order backlog at the end of 2013 was 1,280, up 32.6% from the end of 2012.

M/I Homes has moved aggressively to increase market share over the last year, by increasing its “geographic footprint” and substantially increasing its land/lot holdings. At the end of 2012 the company owned or controlled 19,831 lots, up 39.6% from the end of 2012 and up 91.5% from the end of 2011.

PulteGroup reported that net home orders in the quarter ended December 31, 2013 totaled 3,214, down 18.1% from the comparable quarter of 2012. Home deliveries last quarter totaled 4,964, down 3.7% from the comparable quarter of 2012, at an average sales price of $325,000, up 13.2% from a year ago. The company’s order backlog at the end of 2013 was 5,772, down 10.6% from the end of 2012.

Pulte has been “de-leveraging” and focusing on “value creation” and cost control, meaning that the company has focused on profitability at the expense of market share (and has virtually eliminated its “spec” business). Pulte said that last quarter’s gross margin was its highest since 2005. On its conference call an official said that net orders were “flat” in December relative to November (orders normally fall MOM in December), and said that the company “liked what we’ve seen” so far in January. Pulte noted that it planned to increase its “land spend” in 2014.

On the home price front, Pulte noted that the YOY increase in average home prices was 6% for its Centex division, which focuses on first-time buyers, 13% for its Pulte division, which focuses on move-up buyers, and 11% for its Del Webb division, which focuses on the “active adult” market.

The Ryland Group reported that net home orders (including discontinued operations) in the quarter ended December 31, 2013 totaled 1,428, down 4.9% from the comparable quarter. The company’s community count at the end of 2013 was up 21,8% from a year earlier. Ryland’s sales cancellation rate, expressed as a % of gross orders, was 20.0% last quarter, up from 17.9% a year ago. Sales per community were down about 19% from a year ago. Home deliveries last quarter totaled 2,178, up 38% from the comparable quarter of 2012, at an average sales price of $314,000, up 16.3% from a year earlier. The company’s order backlog at the end of December was 2,626, up 9.5% from the end of 2012. Ryland owned or controlled 38,770 lots (including jvs) at the end of December, up 35.5% from the end of 2012 and up 76.9% from the end of 2012. Ryland’s orders last quarter were “disappointing” given its sharp increase in community count and appeared to reflect slower buying in response to the company’s aggressive price hikes, particularly in the West and Southeast.

In slides that went along with its earnings conference call, Ryland said it plans to increase its active community count in 2014 “in excess” of 20%.

Beazer Homes reported that net home orders in the quarter ended December 31, 2013 totaled 895, down 4.0% from the comparable quarter of 2012. Beazer’s average community count last quarter was down 8.6% from a year ago. The company’s sales cancellation rate, expressed as a % of gross orders, ws 21.8% last quarter, down 26.4% from a year earlier. Home deliveries last quarter totaled 1,038, unchanged from the comparable quarter of 2012, at an average sales price of $279,500, up 18.6% from a year ago. The company’s order backlog at the end of 2013 was 1,750, down 3.7% from the end of 2012.

Beazer owned or controlled 28,978 lots at the end of 2013, up 15.4% from the end of 2012. Beazer’s “land spend” increased significantly beginning last spring, but the “conversion” to active communities has been slower than hoped for. In slides that went along with its earnings conference call, Beazer said that it expected its average community count in the quarter ending September 30, 2014 to be up by about 16% from the latest quarter.

Meritage Homes, MDC Holdings, and Standard Pacific Corp. are scheduled to release their quarterly results next week (February 5th.)

	Net Orders			Settlements			Average Closing Price
Qtr. Ended:	12/13	12/12	% Chg	12/13	12/12	% Chg	12/13	12/12	% Chg
D.R. Horton	5,454	5,259	3.7%	6,188	5,182	19.4%	$263,542	$236,067	11.6%
PulteGroup	3,214	3,926	-18.1%	4,964	5,154	-3.7%	$325,000	$287,000	13.2%
NVR	2,631	2,625	0.2%	3,342	2,788	19.9%	$365,300	$331,900	10.1%
The Ryland Group	1,428	1,502	-4.9%	2,178	1,578	38.0%	$314,000	$270,000	16.3%
Beazer Homes	895	932	-4.0%	1,038	1,038	0.0%	$279,300	$235,500	18.6%
M/I Homes	793	673	17.8%	1,120	887	26.3%	$292,000	$273,000	7.0%

	Net Orders			Settlements			Average Closing Price
Calendar Year	'13	'12	% Chg	'13	'12	% Chg	'13	'12	% Chg
D.R. Horton	25,315	22,513	12.4%	25,161	19,954	26.1%	$255,646	$228,395	11.9%
PulteGroup	17,080	19,039	-10.3%	17,766	16,505	7.6%	$305,000	$276,000	10.5%
NVR	11,800	10,954	7.7%	11,834	9,843	20.2%	$349,043	$317,073	10.1%
The Ryland Group	7,263	5,781	25.6%	7,035	4,897	43.7%	$296,000	$262,000	13.0%
Beazer Homes	4,989	5,111	-2.4%	5,056	4,603	9.8%	$262,004	$229,126	14.3%
M/I Homes	3,787	3,020	25.4%	3,472	2,765	25.6%	$286,000	$264,000	8.3%
Total	70,234	66,418	5.7%	70,324	58,567	20.1%	$289,824	$261,263	10.9%