Homebuilder Pain Spreads

Pulte Homes(PHM) and Beazer Homes(BZH) became the latest builders to slash guidance amid a drop in earnings and orders as the U.S. housing market continues to slow.

Meanwhile, government data Thursday showed that sales of new homes came in lower than economists expected and inventories continued to spike.

Pulte said late Wednesday that its second-quarter earnings from continuing operations fell to $243.9 million, or 94 cents a share, from $305.2 million, or $1.16 a share, a year earlier. Analysts expected earnings from continuing operations of 90 cents a share, according to Thomson First Call.

Pulte's net income, which includes losses from discontinued operations, fell to $243 million, or 94 cents a share, from $303.7 million, or $1.16 a share.

Revenue rose 3% from last year to $3.36 billion, beating analyst estimates of $3.30 billion.

However, new orders -- a key predictor of a homebuilder's future growth prospects -- fell 30% to 9,455 homes from 13,581 a year earlier. Pulte's backlog was valued at $6.9 billion at the quarter's end, compared with a value of $7.8 billion a year earlier.

Pulte slashed its 2006 earnings projection to $4 to $4.30 a share, down from the guidance it gave in early June of $4.70 to $5 per share. Analysts, on average, had forecast a profit of $4.44 a share.

Beazer, meanwhile, said Thursday that its second-quarter profit fell to $102.6 million, or $2.37 a share, from $112.7 million, or $2.50 a share, a year earlier. Revenue dropped to $1.20 billion from $1.29 billion.

Analysts, on average, expected earnings of $2.35 a share and revenue of $1.32 billion.

The Atlanta-based builder posted a 16% drop in new orders to 4,378 homes from 5,202 a year earlier.

The company, noting that it doesn't expect housing conditions to improve in the remainder of the year, said it now expects 2006 earnings of $9.25 to $9.75 a share. Beazer's previous guidance called for earnings of $10 to $10.50 a share; analysts predict a profit of $9.60 a share.