Homebuilder Ryland (RYL - Cramer's Take - Stockpickr - Rating) projected a loss for the second quarter and reported a 17% drop in new-home orders for the period.
The company said late Tuesday that it expects to report a loss of $1.25 to $1.35 a share for the quarter ending June 30. Analysts had been expecting a profit of 32 cents a share, according to Thomson Financial.
The expected loss stems from $145 million to $155 million of charges related to inventory impairments and write-offs, Ryland said.
As prices fall for new houses, builders are finding previous land investments are no longer profitable, forcing them to record impairment charges. Ryland said its impairments were associated with projects in Arizona, California, Florida and Nevada.
From CBS.Marketwatch:
Home-building bellwether D.R. Horton Inc. early Tuesday said quarterly orders for new homes fell 40% from a year earlier and that it expects to post a loss after impairment charges.
The Ft. Worth, Texas-based company said net sales orders for its fiscal third quarter ended June 30 dropped to 8,559 homes valued at $2 billion, compared with 14,316 homes or $3.8 billion in the year-ago period.
"Market conditions for new home sales declined in our June quarter as inventory levels of both new and existing homes remained high, and we expect the housing environment to remain challenging," said D.R. Horton Chairman Donald Horton in a statement.
He said the builder lowered its prices in response to sagging sales. The company expects to see a loss for both the third quarter and the nine months ended June 30, after charges. Analysts polled by Thomson Financial had been looking for net income of 7 cents a share in the latest quarter, on average.
I would expect more news like this from the homebuilders for the foreseeable future.
