Land Charges Hit Horton, Pulte

The homebuilders each say the housing market remains troublesome.
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Homebuilders D.R. Horton (DHI) - Get Report and Pulte Homes (PHM) - Get Report each reported weaker results for the recently ended quarter as land impairments continue to drag down profits.

Horton earned $51.7 million, or 16 cents a share, for its fiscal second quarter, down from $352.8 million, or $1.11 a share, a year earlier. Analysts expected a profit of 27 cents a share, according to Thomson Financial.

The results were weighed down by $81.2 million of charges associated with writing down the value of unprofitable land investments.

Revenue for the quarter ended March 31 fell 26% to $2.6 billion. As the company

reported last week, orders tumbled 37% to 9,983 units.

"Market conditions in the homebuilding industry continue to be challenging in most of our markets as inventory levels of both new and existing homes remain high, and further increases in the use of sales incentives continue to put pressure on profit margins," said Chairman Donald Horton in a press release Thursday.

Elsewhere, Pulte said late Wednesday that it expects to report a first-quarter loss of 34 cents to 38 cents a share amid $130 million to $140 million of land impairment charges.

Previously, Pulte projected first-quarter results ranging from break-even to a loss of 10 cents a share, before charges. Analysts, on average, forecasted a loss of 12 cents a share.

The company's orders fell 21% in the quarter to 8,499 homes. Pulte's cancellation rate improved to 24% from 35% in the fourth quarter.

"The operating environment for homebuilding continues to be challenging, with orders and closings remaining under pressure," said Richard Dugas, president and CEO. "While we experienced improvement in our cancellation rate compared with the fourth quarter, the housing market remains difficult."

Pulte will release its full results April 25.

Shares of Horton recently were up 23 cents, or 1%, to $23.27. Pulte was down 2 cents to $27.93