Wednesday, June 06, 2007

Meritage Homes Revises Outlook

by Calculated Risk on 6/06/2007 05:06:00 PM

Via CNN Money: Weaker Trends in Home Sales Cause Meritage Homes to Revise Its Outlook for 2007 (hat tip Brian)

Meritage Homes Corporation ... reported today that April and May home sales have been weaker than expected, as reported by other leading homebuilders, and lower than the Company's first quarter order rates. Preliminary net sales for the first two months of the second quarter were approximately 21% lower than the same period last year, and cancellations increased to a rate of 36% of gross orders, from 27% reported in the first quarter 2007.
Orders down. Cancellations up. Hope gone.
"We were encouraged by sales and cancellation rates that improved each month of the first quarter, leading us to anticipate relatively stronger second quarter sales results," said Steven J. Hilton, chairman and CEO of Meritage. "But these positive trends ended at the beginning of April, as demand slowed and cancellations rose. The weaker conditions we noted in April when we reported our first quarter results, continued through May. Order cancellations increased after widely-reported concerns over credit tightening and difficulties in the subprime markets, which appeared to dampen consumers' confidence and demand for homes."
"In light of weaker conditions and reduced expectations, we are reviewing our operating plans for the remainder of the year, as we continue to focus on protecting our balance sheet and maximizing our flexibility through this downturn."
emphasis added

Housing is taking the next expected downturn. Well, expected by some, but a complete surprise to others.