RESTON, Va. (AP) â¿¿ NVR Inc., a homebuilder and mortgage company, posted a 22 percent jump in second-quarter net income as new orders and backlog increased. But the cancellation rate climbed and NVR's revenue performance fell short of most expectations, sending shares down nearly 10 percent.
The housing sector was also met with some disconcerting news on Thursday, with the National Association of Realtors announcing that sales of previously occupied homes fell 5.4 percent in June to a seasonally adjusted annual rate of 4.37 million homes. That's the fewest since October.
Mortgage buyer Freddie Mac also said that the average rates on fixed mortgages dropped again this week to record lows. While low rates provide an incentive for people to buy homes, many consumers are still hesitant due to economic volatility and high unemployment. And tight lending standards have made it difficult for those that are interested in making a purchase.
NVR, based in Reston, Va., earned $46.8 million, or $8.97 per share, compared with $38.4 million, or $6.48 per share, in the prior-year period.
The performance beat the $8.81 per share that analysts polled by FactSet predicted.
Revenue for the three months ended June 30 climbed 11 percent to $769.8 million from $695.9 million. This missed Wall Street's estimate of $829.6 million.
Shares of NVR dropped $84.43, or 9.7 percent, to $782. Over the past year, the stock has traded in a range of $554.71 to $879.99.
New orders increased 6 percent to 2,614 units, while the backlog of homes sold but not yet closed rose 28 percent to 5,048 homes. Closings increased 12 percent to 2,475 units.
The cancellation rate climbed to 16.3 percent from 12.5 percent.