ALEX VEIGALOS ANGELES (AP) â¿¿ Homebuilder Beazer Homes USA Inc. reports fiscal first-quarter results before the stock market opens on Tuesday. WHAT TO WATCH FOR: How new home orders fared October through December, when the pace of new home sales improved from the lowest level in decades during the summer. Also, any word on whether demand is picking up in advance of the spring home-selling season. Homebuilders got a helping hand from Uncle Sam last year in the form of federal tax credits for homebuyers. The incentives helped stoke sales until they expired in April. Sales tanked afterward and 2010 ended as the worst year for new home sales since at least 1963. High unemployment, tight credit and uncertainty about home prices are keeping many would-be buyers on the sidelines despite mortgage rates remaining at near-historic lows. Sales improved in November and again in December, but not enough to lift results for several major builders. In recent weeks, KB Home, Lennar Corp., D.R. Horton Inc., Standard Pacific Corp., and PulteGroup Inc. all reported sharp drops in home deliveries and contracts for new homes during their latest quarters. Meritage Homes Corp. bucked that trend, reporting a 15 percent jump in new home orders, but the increase appears to have been fueled by heavy discounting. And its home deliveries sank 30 percent. Beazer is expected to post similarly lackluster order trends for its fiscal first quarter. JMP Securities analyst James Wilson expects Beazer's new home orders will be down 10 percent versus the prior-year period. He projects a 27 percent decline in delivered homes. In its fiscal fourth quarter, Beazer saw home closings plunge 30 percent while contracts on new homes fell 20 percent. Coming off a forgettable 2010, homebuilders are hoping the spring season, which kicks off in earnest this month, will lift their lagging sales.
More home sales would certainly help Beazer, but it still faces an uphill climb to get out of the red because of weak profit margins."Margins are the big question mark, because they're still really low and they're such that it doesn't allow them to be profitable," Wilson says. Not all of the challenges Beazer has faced of late have been related to weak housing demand. In December, the company agreed to pay a fine of $925,000 to resolve claims that it violated federal clean water laws. It also agreed to make changes to how it manages stormwater runoff at its home construction sites in 21 states. WHY IT MATTERS: Homebuilders are a bellwether for the housing market and the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates. Beazer, which is based in Atlanta, is one of the nation's 10 largest builders of single-family homes and has operations in 16 states. WHAT'S EXPECTED: Analysts polled by FactSet expect Beazer will report a loss of 50 cents a share on $163.7 million in revenue. Wilson predicts a loss of 37 cents a share. "They're still going to lose money and it's hard to expect a whole lot out of the quarter," he says. LAST YEAR'S QUARTER: Beazer reported a profit of $48 million, or $1.17 a share, on revenue of $218.8 million. Those results included a $101 million tax gain.