Thursday, April 24, 2014

Lawler: More Builder Results, Summary of Q1 Results so far

by Bill McBride on 4/24/2014 03:29:00 PM

D.R. Horton, the nation’s largest home builder, reported that net home orders in the quarter ended March 31, 2014 totaled 8,569, up 8.8% from the comparable quarter of 2013. Horton’s average community count last quarter was up 11% from a year ago. The company’s sales cancellation rate, expressed as a % of gross orders, was 19%, unchanged from a year ago. Home deliveries totaled 6,194 last quarter, up 13.4% from the comparable quarter, at an average sales price of $271,230, up 11.8% from a year ago. The company’s order backlog at the end of March was 10,059, up 5.3% from last March.

In response to overall weak demand from first-time home buyer, partly attributable in home price increases over the past two years, Horton announced in its conference call that is initiating a new product line called “express homes,” which will be smaller and priced lower than its current product lines and will be targeted to first-time buyers. An official said that first-time home buyers represented 42% of the purchase mortgages handled by its mortgage subsidiary last quarter, down from 50% in the comparable quarter of 2013. An official also said that the company increased sales incentives “some, but not significantly,” last quarter.

D.R. Horton’s results were stronger than consensus.

PulteGroup, the nation’s second largest home builder, reported that net home orders in the quarter ended March 31, 2014 totaled 4,863, down 6.5% from the comparable quarter of 2013. While net orders were down from a year ago, the company said that absorptions per community were up from last year. (Pulte has focused more on returns and less on expansion). Home deliveries last quarter totaled 3,436, down 10.4% from the comparable quarter of 2013, at an average sales price of $317,000, up 10.5% from a year ago. The company’s order backlog at the end of March was 7,199, down 8% from last March. Company officials noted that absorption rates per community were up significantly from a year ago in its lower-priced Centex division, but that this gain mainly reflected the strong Texas market, and not strength in first-time home buyer demand.

The Ryland Group, the nation’s eighth largest home builder, reported that net home orders in the quarter ended March 31, 2014 totaled 2,186, up 6.5% from the comparable quarter of 2013. Ryland’s community count in March was up 18.8% from last March, and the company’s average sales absorption rate per community last quarter was down by over 10% from a year ago. The company’s sales cancellation rate, expressed as a % of gross orders, was 15.3%, little changed from 15.4% a year earlier. Home deliveries last quarter totaled 1,470, up 11.8% from the comparable quarter of 2013, at an average sales price of $327,000, up 18.1% from a year ago. The company’s order backlog at the end of March was 3,342, up 6.6% from last March, with an average order price of $330,000, up 14.2% from a year ago. Ryland owned or controlled 39,482 lots at the end of March, up 30.3% from last March and up 69.5% from two years ago.

M/I Homes, the nation’s 16th largest home builder, reported that net home orders in the quarter ended March 31, 2014 totaled 982, down 6.2% from the comparable quarter of 2013. M/I’s average community count last quarter was 158, up 17.0% from the comparable quarter of 2013, and the company’s net sales per community last quarter were down 21% from a year ago. The company’s sales cancellation rate, expressed as a % of gross orders, was 16% last quarter up slightly from 15% a year earlier. Home deliveries last quarter totaled 737, up 17.5% from the comparable quarter of 2013, at an average sales price of $299,000, up 5.3% from a year ago. The company’s order backlog at the end of March was 1,525, up 10.1% from last March. M/I owned or controlled 20,965 lots at the end of March, up 28.2% from a year ago.

Here is a summary of some results from large, publicly-traded builders

 Net OrdersSettlementsAverage Closing Price
Qtr. Ended:3/143/13% Chg3/143/13% Chg3/143/13% Chg
D.R. Horton8,5697,8798.8%6,1945,46313.4%$271,230$242,54811.8%
Pulte
Group
4,8635,200-6.5%3,4363,833-10.4%$317,000$287,00010.5%
NVR3,3253,510-5.3%2,2112,272-2.7%$361,400$330,4009.4%
The Ryland Group2,1862,0526.5%1,4701,31511.8%$327,000$277,00018.1%
Meritage Homes1,5251,547-1.4%1,1091,0525.4%$365,896$314,36316.4%
M/I Homes9821,047-6.2%73762717.5%$299,000$284,0005.3%
Total21,45021,2351.0%15,15714,5624.1%$308,445$278,04010.9%

Hotels: Occupancy Rate, RevPAR decrease in latest weekly survey

by Bill McBride on 4/24/2014 03:12:00 PM

From HotelNewsNow.com: US hotels report occupancy, RevPAR decreases

The U.S. hotel industry reported occupancy and revenue-per-available-room decreases during the week of 13-19 April 2014, according to data from STR, parent company of Hotel News Now.

Overall, in year-over-year measurements, the industry’s occupancy decreased 2.7% to 62.8%. RevPAR decreased 0.3% to $70.58. Average daily rate increased 2.5% to $112.37.
emphasis added
Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The weekly decline was probably related to the timing of Easter, however the 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is at the highest level since 2000. 

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy Rate Click on graph for larger image.

The red line is for 2014 and black is for 2009 - the worst year since the Great Depression for hotels.

Through April 19th, the 4-week average of the occupancy rate is tracking higher than pre-recession levels.   


Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

Kansas City Fed: Regional Manufacturing "Activity Moderated Slightly" in April

by Bill McBride on 4/24/2014 11:08:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Activity Moderated Slightly

The Federal Reserve Bank of Kansas City released the April Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity moderated slightly after rising to a two-year high in March, but producers’ expectations for future factory activity climbed higher.

“Regional factory expansion was not quite as strong in April as in March, when better weather provided a boost”, said Wilkerson. “But April’s numbers were otherwise the best in nearly two years, and firms were generally optimistic.”

The month-over-month composite index was 7 in April, down from 10 in March but up from 4 in February. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. ... the order backlog index moved into positive territory for the first time in four months, and the employment index rebounded after falling last month.
emphasis added
The last regional Fed manufacturing survey for April will be released on Monday, April 28th (Dallas Fed). In general the regional surveys have been positive in April and suggest further improvement in the ISM manufacturing index.

Weekly Initial Unemployment Claims at 329,000

by Bill McBride on 4/24/2014 08:37:00 AM

The DOL reports:

In the week ending April 19, the advance figure for seasonally adjusted initial claims was 329,000, an increase of 24,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 304,000 to 305,000. The 4-week moving average was 316,750, an increase of 4,750 from the previous week's unrevised average of 312,000.

There were no special factors impacting this week's initial claims.
The previous week was revised up from 304,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 316,750.

This was above the consensus forecast of 313,000.  The 4-week average is close to normal levels for an expansion.

Wednesday, April 23, 2014

Thursday: Unemployment Claims, Durable Goods, Kansas City Mfg Survey

by Bill McBride on 4/23/2014 06:56:00 PM

Nick Timiraos at the WSJ has some excerpts from a research note by Goldman Sachs economists: Why Credit Is Key for the Housing Recovery

The Goldman economists say they expect new home sales to reach 800,000 units by 2017, up from 430,000 last year, based on traditional drivers such as job growth and household formation. But sales will only rise to around 600,000 units in 2017 if lending standards remain at their current levels.
...
Nearly 40% of new borrowers last year had credit scores above 760, compared with just 25% before the housing bubble in 2001. Meanwhile, less than 0.2% of borrowers had credit scores below 620, compared to 13% in 2001.
Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 313 thousand from 304 thousand.

• Also at 8:30 AM, the Durable Goods Orders for March from the Census Bureau. The consensus is for a 2.0% increase in durable goods orders.

• At 11:00 AM, the Kansas City Fed manufacturing survey for April.

Last 10 Posts