Interest Rate Roundup

Tuesday, April 10, 2007

Horton CEO wasn't kidding -- these numbers do "suck"

Several weeks ago, D.R. Horton CEO Donald Tomnitz grabbed some headlines by saying "2007 is going to suck, all 12 months of the calendar year." And based on the numbers his company just released, Horton is having no problem keeping that promise. In the fiscal second quarter ...

* Orders plunged 37% to 9,983 units worth $2.6 billion, compared with 15,771 units worth $4.4 billion in the same period of 2006. There was no solace to be found in the regional breakdown, either. Orders dropped in 6 out of 6 areas of operation.

* If you divide the dollar volume of orders by the unit volume for Q2 2006, you get an average price of $276,659. Do the same for Q2 2007 and you get $260,372. That's good for a 5.9% drop.

* Cancellation rates remain in the ozone -- at 32% in the period that ended March 31.

* Chairman of the Board Donald Horton didn't deliver much in the way of positive commentary either. His remarks: "Market conditions for new home sales continue to be challenging in most of our markets as inventory levels of both new and existing homes remain high. Our cancellation rate is essentially unchanged from the prior quarter, but it remains above our historical range as we continue to see an increase in the use of sales incentives in many of our markets. We continue to sell more homes than any other builder, even though the spring selling season has not gotten off to its usual strong start."


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