D.R. Horton orders off 37%

D.R. Horton Inc., the largest U.S. home builder, said Tuesday that orders for new homes tumbled 37% last quarter and that the spring selling season had been slower than usual, suggesting that the housing market had not hit bottom.

Chairman Donald R. Horton said conditions remained tough in most markets because of high inventories of unsold new and existing homes. He also said “the spring selling season has not gotten off to its usual strong start.”

The downturn in the housing market has hit home builders and related sectors hard, and tightened loan policies because of the sub-prime mortgage crisis have exacerbated the industry’s pain.

D.R. Horton joined a list of other home builders, such as Lennar Corp. and Ryland Group Inc., which have recently said the spring selling season, traditionally the strongest of the year, has failed to materialize.

Still, Thomas Leritz, a portfolio manager of Argent Capital Management in Clayton, Mo., said D.R. Horton’s news was not surprising because the industry had curbed building while it worked through an excess supply of unsold homes.

UBS analyst Margaret Whelan said in a research note that the order decline was larger than expected and she cut her 2007 and 2008 earnings estimates for D.R. Horton. However, Whelan said the flat pricing from the prior quarter showed that management was focused on protecting profit.

D.R. Horton’s net sale orders in its fiscal second quarter ended March 31 fell to 9,983 homes from 15,771 a year earlier, and the dollar value of the orders sank 41%, to $2.6 billion from $4.4 billion.

Although the Fort Worth-based company saw orders fall in all regions, the biggest decline was in California, with a 59% drop to 1,107 homes. Its California market also had the biggest drop in dollar value of orders, about 57% to $533.5 million.

Prospective buyers canceled at a 32% rate from January to March, down from 33% in the prior quarter, but above the usual 16% to 20% rate, D.R. Horton said.

It has become more difficult for many buyers to obtain mortgages as lenders have tightened their underwriting standards.

The steeper decline in the dollar value of D.R. Horton’s home orders, relative to the number of orders, suggests that some buyers are downsizing to buy homes they can more easily afford.

First-time home buyers account for about 40% of D.R. Horton’s sales.

Shares of D.R. Horton fell 34 cents, or 1.5%, to $21.70.