Wednesday, November 12, 2014

Lawler: Beazer Results and Q3 Builder Summary Table

by Bill McBride on 11/12/2014 04:18:00 PM

From housing economist Tom Lawler: Beazer Homes: Net Orders Down a Bit, Double-Digit Drop in Net Orders/Community; 2014 Unit Sales “Disappointing” Though Home Prices Increased More Than “Expected”

Beazer Homes reported that net home orders in the quarter ended September 30, 2014 totaled 1,173, down 1.3% from the comparable quarter of 2013. Net orders per community last quarter were down about 11% from a year ago. Home deliveries last quarter totaled 1,695, up 2.3% from the comparable quarter of 2013, at an average sales price of $294,500, up 12.2% from a year ago. The company’s order backlog at the end of September was 1,690, down 10.7% from last September. The company owned or controlled 28,127 lots at the end of September, up 0.4% from last September and up 16.5% from two years ago.

Company officials described housing demand as “uneven” in 2014, but on average felt that demand was “disappointing,” and the company sold fewer houses than it had “expected.” Officials also said, however, that its average sales price increased by more than “expected,” but strangely officials did not link the higher prices with lower sales.

For the latest quarter officials described July sales as “so-so,” August sales as “awesome,” and September sales as “not so good.”

For FY 2015 (Beazer’s FY ends on September 30), Beazer expects “mid-teens” growth in its net orders and its community count, and an average sales price “nearing” $320,000. The ASP was $284,800 for FY 2014 and $294,500 for the latest quarter. Officials implied that this surprisingly high ASP expectation would come mainly from regional and product mix. Most analysts were skeptical that the company could achieve that high a sales price AND grow orders at a mid-teens pace.

Here are some summary stats for nine builders reporting results for the quarter ending September 30th.

  Net OrdersSettlementsAverage Closing Price
Qtr. Ended:09/1409/13% Chg09/1409/13% Chg09/1409/13% Chg
D.R. Horton7,1355,16038.3%8,6126,86625.4%$279,099262,4536.3%
PulteGroup3,7793,781-0.1%4,6464,817-3.5%$334,000310,0007.7%
NVR2,9362,38123.3%3,2363,342-3.2%$366,200349,2004.9%
The Ryland Group1,7071,5927.2%2,0181,8837.2%$331,000298,00011.1%
Beazer Homes1,1731,192-1.6%1,6951,6572.3%$295,400263,20012.2%
Standard Pacific1,1541,1104.0%1,2501,2172.7%$483,000420,00015.0%
Meritage Homes1,5001,30015.4%1,5221,4187.3%$358,000341,0005.0%
MDC Holdings1,08192417.0%1,0931,257-13.0%$370,600345,0007.4%
M/I Homes8928692.6%9859375.1%$320,000284,00012.7%
Total21,35718,30916.6%25,05723,3947.1%$326,373$305,8056.7%


Net orders per community of these nine builders combined were up about 7.4% from a year ago. Acquisitions of other builds probably added about 1.6 percentage points to the YOY growth in net orders for the group. The order backlog for these builders at the end of September totaled 37,643, up 9.5% from last September.

Here is a chart comparing Census’ estimate for new SF home sales with net orders from these nine large builders (indexed: 2010 = 100)

Home Builders vs. Census New Home Sales Click on graph for larger image.

Builders report net orders as gross orders in a quarter less sales cancellations in a quarter. Census defines “home sales” as gross contract signings less contract signings on homes on which a previously signed contract had been cancelled. There also appears to be a timing difference between when a builder recognizes an order and the date of a contract signing in Census’ Survey of Construction.