Tuesday, August 04, 2015

Lawler: Large Home Builder Results, Q2/2015

by Bill McBride on 8/04/2015 03:18:00 PM

From housing economist Tom Lawler:

Below is a table showing some selected operating statistics for nine large, publicly-traded home builders for the quarter ended June 30, 2015.

As the table indicates, reported net home orders for these nine home builders in the quarter ended June 30, 2015 were up 13.7% from the comparable quarter of 2014. There are a few things worth noting. First, while Standard Pacific’s reported net home orders for the latest quarter exclude orders associated with the acquisition of a small Austin builder last June, both Horton’s orders and Meritage’s orders include orders associated with acquisitions of builders subsequent to the beginning of the second quarter of 2014. My “best guess” is that net home orders for these nine builders last quarter excluding the impact of such acquisitions were up about 12.5% from the comparable quarter of 2014.

On July 24th Census, in its “New Residential Sales” report for June, estimated that new home sales ran at a seasonally adjusted annual rate of 482,000, well below the “consensus” forecast. In addition, Census revised downward its estimate for home sales for each of the previous three months. For the second quarter as a whole Census estimated that new home sales were up 19% (not seasonally adjusted) from the comparable quarter of 2014 – well above the YOY gain the nine large builders shown above.

Of course, there are several reasons why net home orders for these nine builders do not always track Census’ estimate of new home sales. First, Census treats sales cancellations different than do builders. Second, the geographic “footprint” of these nine builders does not match that of the US as a whole. Third, the market share of these builders can change significantly. And finally, there may be timing differences between when a builder “books” a sale and when a sale is recorded in Census’ Survey of Construction.

Nevertheless, reported home orders from publicly-treaded builders not only “confirm” that new home sales last quarter were below “consensus” forecasts, but also suggest that Census may revise downward its estimate for second-quarter new home sales in the July “New Residential Sales” report.

  Net OrdersSettlementsAverage Closing
 Price ($000s)
Qtr. Ended:6/156/14% Chg6/156/14% Chg6/156/14% Chg
D.R. Horton10,3988,59121.0%9,8567,67628.4%2902726.5%
The Ryland Group2,3872,2287.1%1,8141,7006.7%3513335.4%
Beazer Homes1,5241,29018.1%1,2931,2414.2%41037210.2%
Standard Pacific1,5671,42510.0%1,3051,2365.6%53247911.1%
Meritage Homes1,9861,64720.6%1,5561,36813.7%3803683.3%
MDC Holdings1,4811,4194.4%1,1261,158-2.8%41037210.2%
M/I Homes1,1001,0168.3%9198942.8%34030611.1%