Beazer Homes: Hard Times Ahead

ATLANTA (TheStreet) -- Shares of Beazer Homes USA(BZH) are off considerably on Friday after the homebuilder posted a wider-than-expected loss in its recent quarter.

Revenue in the period surged 51.7% to $339.9 million, mainly on the back of homebuyers rushing to take advantage of federal tax credits, but tumbling home prices, a sharp drop in orders and backlog, and a cancellation rate that spiked 600 basis points to 29% paint a sober portrait of what's to come.

"The weak order trends signal trouble for the fourth quarter," noted Vicki Bryan, senior high yield analyst at Gimme Credit. "Beazer will have to convert an unprecedented -- and unlikely -- 143% of its backlog just to deliver the same number of homes sold in [the fourth quarter of 2009] (when sales were boosted by the November expiration of stimulus programs)."

Home sale closing volumes for most homebuilders were fueled earlier this year by consumers rushing to take advantage of the tax credits that offered as much as $8,000 for first-time home buyers. The still-struggling housing market saw sales ramp up in March and April since buyers had to have signed a contract by the end of April and initially had until the end of June to complete the deal. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.