Two More Builders Warn on Earnings

Pulte Homes Inc. and Standard Pacific Corp. on Friday became the latest major home builders to warn of lower full-year earnings as the housing market continues to cool across the country.

The news pushed down the shares of Bloomfield Hills, Mich.-based Pulte more than 5% to a 52-week low.

Pulte, the No. 2 builder by volume, cut its full-year outlook after Hovnanian Enterprises Inc. and Toll Bros. Inc. lowered their forecasts within the last month.

Irvine-based Standard Pacific reported after the stock market closed that it expected to cut its earnings and delivery guidance for the full year.

All four companies cited large drops in new orders and jumps in cancellation rates in the second quarter on top of rising interest rates and larger inventories of unsold properties.

Pulte, which operates in 27 states, reported that preliminary new orders dropped about 29% in April and May from the same period last year to 6,447 units from 9,128 units.

Standard Pacific said net orders were off in California, Florida and Arizona, contributing to a 41% drop in April and May compared with a year earlier.

Toll Bros., a luxury home builder operating in 21 states, recorded a 29% drop in signed contracts for the second quarter. Hovnanian, which builds mostly in the Northeast, California and the Washington, D.C., area, saw about a 19% drop in net contracts.

“Buyer demand through April and May has been below expectations,” Richard J. Dugas Jr., Pulte’s president and chief executive, said in a statement.

Home prices could slip as companies offer incentives and discounts, said Rick Murray, an analyst with Raymond James & Associates. Investors, who bought many homes during the boom, could sell their assets as the market cools.

“I think it’s safe to say the housing boom is over,” he said.