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Meritage posts loss, sees demand up in 2009

Tue Apr 29, 2008 12:35pm IST
 
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NEW YORK (Reuters) - U.S. home builder Meritage Homes Corp (MTH.N: Quote, Profile, Research) posted a first-quarter net loss on Monday after a falloff in sales in Arizona, but said fewer unsold new homes should lead to firmer prices and greater demand in 2009.

Most large homebuilders have successfully reduced the number of homes built without a buyer to desired levels, "and now appear to have an emphasis on holding prices," Steven Hilton, chairman and chief executive of Meritage, said in a statement.

"Stabilizing prices should help improve buyer confidence over the next several quarters, and lead to improving demand in 2009 and beyond," Hilton said.

For the first quarter, Meritage reported a loss of $45.3 million, or $1.72 per share, compared with a profit of $15.1 million, or 57 cents per, in the year-earlier quarter.

Analysts, on average had expected, a loss of $1.44 per share, according to Reuters Estimates.

The first-quarter 2008 results include impairments of $60 million related to the lower value of land and price-cutting on selling existing inventory. Earlier in April, the company said it expected those charges to be about $60 million to $65 million.

The U.S. housing market is experiencing one of the worst downturns in its history. Last week, the U.S. Commerce Department reported that new home sales in March dropped 8.5 percent to a rate of 526,00 annually, the lowest level since October 1991.

Hilton said that since Meritage had reduced its inventory of speculative homes in most active communities to the company's targeted levels, Meritage expected less aggressive pricing on speculative homes and new homes built to order. Hilton said that should help to reduce future impairments.

In response to the weak market, U.S. home builders have been focusing on generating cash to pay off debt and getting rid of excessive land and inventory.   Continued...

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