PHILADELPHIA – In a sign of a deepening national housing slump, two major homebuilders on Tuesday reported steep declines in new orders and weaker fourth-quarter results.
Luxury home builder Toll Brothers Inc. of Horsham, Pa., said home-building revenue fell by 10 percent and signed contracts were down by 55 percent compared with a year ago. The company, which released its quarterly outlook ahead of earnings, also said it will incur a hefty charge against profits as it pares down the number of lots it controls.
Beazer Homes USA Inc. of Atlanta reported a 44 percent decline in profit as higher revenue was offset by squeezed margins. The company said there was “significant” discounting in most markets.
New orders for Beazer fell by 58 percent to 2,064 homes from 4,937 last year, as the housing market continued to slow. It has cut 1,000 jobs, or 25 percent of its work force.
“We think it’s a loss of confidence in the buyers,” Toll Brothers Chief Executive Robert Toll said during a conference call with analysts Tuesday. “Nobody wants to buy something that they think will cost less two weeks later.”
He said at one point he thought the housing market was bumping along at the bottom, but business continued to worsen. Toll noted the company has had two rounds of layoffs but didn’t say how many people were let go.
“I am surprised,” Toll said, adding that the downturn seems atypical, given good conditions for housing with low unemployment and interest rates.
The average rate on the 30-year, fixed rate mortgage was 6.31 percent last week, according to Freddie Mac. The rate has fallen from 6.8 percent in July.
In the quarter, Toll Brothers’ home-building revenue fell to $1.81 billion from last year’s $2 billion. Signed contracts – a sign of future business – fell to $710 million from last year’s record $1.59 billion. The housing backlog declined as well, by 25 percent, to $4.5 billion.
Toll Brothers said its fourth quarter was hurt by an above-average 585 cancellations. One-fourth of the quarter’s cancellations came from Orlando, Fla., and Northern California.
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