M.D.C. Still in Doghouse

On a conference call with investors, M.D.C. CEO Larry Mizel dodged two questions about why the company hasn't more aggressively bought back shares, given the recent drop in the stock's price. The company has the authorization to buy back 2.3 million shares but hasn't repurchased for over a year. "When the time is right, we will act on the authorization we have," he said.

M.D.C. said net its new home orders across the country grew 21% to 3,551 in the quarter, but drops were seen in Arizona, Colorado and Virginia. In Virginia, which isn't a major market for the company, orders were cut in half to 96. Mizel said the company remains focused on Virginia and the greater Washington D.C. area and blamed the recent drop on lower seasonal summer sales this year as opposed to last year, when the market was hotter. "The underlying characteristics of that market are still strong," Mizel said, citing job growth and land constraints

Mizel also said that as material costs shoot up -- with steel and copper rising 30% since Katrina, by his account -- the rise in constructions costs amounts to an additional "couple thousand dollars per house." However, thus far, the company has been able to offset the rising costs with higher home selling prices. The average selling price for the company's home closings in the quarter rose 10% year over year to $311,400.

Also on Tuesday, the National Association of Builders/Wells Fargo Housing Market Index reported that builder confidence in the market for newly built single-family homes rebounded by a couple of points in October to the same level at which it was gauged prior to hurricanes Katrina and Rita.

"This is a reassuring sign that builder attitudes are bouncing back from the initial shock of the hurricanes' devastation and the economic uncertainties immediately following those storms, even in the midst of higher mortgage interest rates," said NAHB President Dave Wilson, a custom home builder from Ketchum, Idaho, in a statement.