The surge in orders came as many first-time homebuyers sought to qualify for an $8,000 tax credit that was set to expire at the end of this month before Congress extended it into next year.
D.R. Horton, which caters primarily to first-time buyers, and other builders have seen home orders improve thanks to the incentive. But the tax credit also has raised concerns that it has merely pulled sales forward.
Some builders noted recently that customer traffic began to slow in September and October as would-be buyers realized they might not be able to close on a home by the tax-credit deadline. And new home sales in September dropped 3.6 percent nationwide
- the first decline since March.
D.R. Horton CEO Donald Tomnitz told Wall Street analysts orders began to slow this month, but predicted that completed sales would rise from now on.
"We strongly believe our closings in 2010 will be greater than in 2009 and that we will continue this growth in the upcoming years," Tomnitz said.
Still, the builder cautioned that foreclosures, high levels of unsold homes and rising unemployment remain a challenge for the industry.
"These headwinds continue to impact our business both in our sales volumes and operating margins," the executive told analysts.
The fallout from the sluggish economy and still-weak housing market continues to squeeze homebuilders, and D.R. Horton is no exception. The company, based in Fort Worth, Texas, hasn't reported a quarterly profit since 2007.
For the fiscal fourth quarter ended in September, D.R. Horton posted a loss of $231.9 million, or 73 cents per share, compared with a loss of $799.9 million, or $2.53 per share, a year earlier.
Revenue plunged 42 percent to $1.01 billion.
While the company stemmed its quarterly loss, it racked up $192.6 million in costs due to write-downs on the value of unsold homes, land and other assets.
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"We were looking for them to not have to write down as much inventory this quarter." said Robin Diedrich, an analyst with investment firm Edward Jones.
That contributed to the wider-than-expected loss. On average, analysts surveyed by Thomson Reuters forecast a quarterly loss of 30 cents per share on revenue of $1.11 billion.
The disappointing results drove the company's shares down $1.88, or 15.4 percent, to close at $10.37 Friday.
The write-downs are necessary because foreclosures continue to escalate in many markets, driving down home values, which in turn forces builders to adjust the value of their assets.
The homebuilder, which operates in 27 states, said homes closed during the quarter totaled 4,810, down about 30 percent from the same quarter of fiscal 2008. The average sales price slipped 4 percent to $205,100.
On the Net:
D.R. Horton: http://www.drhorton.com/corp/
Press; By ALEX VEIGA]
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