Home builders see declines in shares Shares of Hovnanian fell $2.39, or 6.2 percent, to close at $36.39 on the New York Stock Exchange. Shares of other home builders also suffered. D.R. Horton Inc., the largest home builder, fell 30 cents, or 1 percent, to finish at $29.44 on the NYSE. Pulte Homes Inc. shares dropped 85 cents, or 2.3 percent, to $35.75, while KB Home shares slipped $1.16, or 1.9 percent, to $59.50.
Home builders see declines in shares Hovnanian's lowered guidance sent stocks tumbling. By J.W. Elphinstone Associated PressNEW YORK - Home-builder shares slipped yesterday after Hovnanian Enterprises Inc. lowered its financial guidance, increasing worries that rising interest rates and cooling demand would further deflate the housing bubble. Shares of Hovnanian fell $2.39, or 6.2 percent, to close at $36.39 on the New York Stock Exchange. Shares of other home builders also suffered. D.R. Horton Inc., the largest home builder, fell 30 cents, or 1 percent, to finish at $29.44 on the NYSE. Pulte Homes Inc. shares dropped 85 cents, or 2.3 percent, to $35.75, while KB Home shares slipped $1.16, or 1.9 percent, to $59.50. After Monday's markets closed, Hovnanian cut its second-quarter and full-year outlook, citing more cancellations, slowing sales, higher material costs, and increased use of concessions and incentives. Hovnanian's announcement followed a similar one last week from Centex Corp., which reported disappointing quarterly earnings and a scaled-down 2007 financial forecast. Beazer Homes USA Inc. also cut its full-year outlook. Hovnanian said it now expected second-quarter earnings of $1.40 to $1.50 a share, down from previous projections of $1.55 to $1.80 a share. For the full year, the company lowered its earnings view to $7.20 to $7.40 a share from $8.05 to $8.40 a share. More guidance adjustments may be on the horizon, according to William Mack, equity analyst at Standard & Poor's, as housing demand cools and rising land and labor costs squeeze profit margins. "We have strong sell recommendations on seven home builders, which could show further downside in guidance and earnings," Mack said. "The important question to ask is, how long will it be until this fully plays out?" Although sales of new homes surged in March by 13.8 percent, the largest amount in 13 years, the median price of homes sold declined 2.2 percent, indicating that home builders are slashing prices to move inventory. That marked the first time that home prices fell over a 12-month period since December 2003. The median price also fell from February by 6.5 percent. |