Tuesday, September 24, 2013

Lawler on Home Builder Results: Rising Rates, Aggressive Price Increases Dampened Sales

by Calculated Risk on 9/24/2013 02:56:00 PM

From housing economist Tom Lawler:

Lennar Corporation reported that net home orders in the quarter ended August 31, 2013 totaled 4,785, up 14.0% from the comparable quarter of 2012, at an average net order price of about $316,750, up 16% from a year ago. Home deliveries totaled 4,990 last quarter, up 36.5% from the comparable quarter of 2012, at an average sales price of $291,000, up 12.8% from a year ago. Sales discounts as a % of purchase price averaged 6.0% last quarter, down from 9.2% in the comparable quarter of 2012. The company’s sales cancellation rate, expressed as a % of gross orders, was 18% last quarter, up from 18% from a year ago. The company’s order backlog at the end of August totaled 5,958, up 32.0% from last August.

KB Homes reported that net home orders totaled 1,736 in the quarter ended August 31, 2013, down 8.6% from the comparable quarter of 2012, at an average net order price of about $304,650, up 16% from a year ago. Home deliveries totaled 1,825 last quarter, up 6.1% from the comparable quarter of 2012, at an average sales price of $299,100, up 22.0% from a year ago. The company’s sales cancellation rate, expressed as a % of gross orders, was 33% last quarter, up 29% from a year ago. The company’s order backlog at the end of August totaled 3,039, down 3.3% from last August.

Here are some quarterly net orders numbers for three large builders (note: Hovnanian’s fiscal quarters end in April and July, but it shows monthly net orders numbers through August in its last presentation).

 Net Home Orders, 3 Months Ending:
8/31/20138/31/2012% Change5/31/20135/31/2012% Change
Lennar Corp.4,7854,19814.0%5,7054,48127.3%
KB Home1,7361,900-8.6%2,1622,0495.5%
Hovnanian Ent.1,4871,519-2.1%1,8621,7536.2%
Total8,0087,6175.1%9,7298,28317.5%