Pulte Takes Cautious Tone

Updated from Oct. 25

Pulte Homes(PHM Quote) said its third-quarter earnings fell 52% from a year ago as the U.S. housing market continued its decline, forcing the homebuilder to write down $87.7 million of land inventory and options.

On its earnings call Thursday, Pulte Chief Executive Richard Dugas told investors that there isn't yet a bottom in the real estate market.

However, he said there are several positive signs developing in the U.S. housing market, such as the dropping inventory of existing homes on the market and the talk that Sacramento (one of the nation's worst housing markets of late) is getting better.

"We would like to see this be the beginning of a more stable operating environment," Dugas told investors on the call.

The homebuilder earned $190.2 million in the third quarter, down from $395.4 million a year earlier, the company said after the market closed Wednesday. Earnings per share from continuing operations dropped to 74 cents from $1.45 in the prior period. Analysts expected earnings of 76 cents a share, according to Thomson First Call.

The company's total revenue dropped to $3.56 billion from $3.79 billion, while gross margins tumbled 670 basis points to 17.1%. Profits were hurt by $87.7 million of charges resulting from adjustments to land values and the write-off of option deposits.