Centex Sees $1 Billion In Charges

The homebuilding industry continues to get worse.

The latest in the ongoing string of bad news in the sector came Friday from Centex(CTX Quote), which said it plans to record nearly $1 billion of write-downs associated with its home and land inventory, while also making it clear that the housing market continues to deteriorate further.

Dallas-based Centex, one of the country's largest homebuilders, said the "housing market continues to be extremely difficult." New orders for the quarter ended Sept. 30 fell 13% from a year earlier, which was already a weakened sales base.

Home closings fell 14% from a year ago, while backlog dropped 38%.

The large charges result from the ongoing slowdown in the housing market. As homebuilders are slashing prices, they're finding communities under development and future land pipelines are no longer profitable.

Under accounting rules, the builders must then write down the values on their balance sheets to a level that allows for the inventory to be sold at a profit.

For the fiscal second quarter, Centex expects to record an impairment of about $850 million for neighborhood and land inventory, and an impairment and option write-off of about $40 million for the company's share of land holdings in joint ventures.

Additionally, Centex expects to write off option deposits and pre-acquisition costs of about $40 million, and to record a goodwill impairment of $65 million related to a previous acquisition.