Builders FirstSource, Inc. (BLDR)

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15:58:09 Today HOV KBH LEN LENB PHM EARNINGS PREVIEW: US Builders Likely Saw Strong Sales In 3Q


By Dawn Wotapka
Of DOW JONES NEWSWIRES


TAKING THE PULSE: U.S. home builders' losses undoubtedly continued in the
third quarter but the sector can finally look past the worst downturn in
generations - for now, at least.

Customers, long paralyzed on the sidelines, are being lured back into the
market by low mortgage rates, fallen home prices and a federal tax credit of up
to $8,000 for qualified first-time buyers. While that is boosting sales,
there's growing concern that after the credit expires Nov. 30, the market will
weaken again.

Even so, builders say there are signs of an upturn. Cancellation rates are
lower as fewer buyers abandon deals. Plunging values for land and housing have
stabilized in some markets - while slowing in others - so land charges will
continue shrinking. Builders are hunting bargain-priced finished lots on which
they can quickly build profitable homes.

Of course, no one's breaking out the bubbly just yet. Unemployment remains
elevated. Foreclosures continue to mount and sell for steep discounts that make
it hard for builders to compete. Financing is still tough to obtain.

Hovnanian Enterprises Inc. (HOV) provided a glimpse of what to expect when it
detailed its 12th consecutive loss earlier this month. For its third quarter
ended July 31, it lost $168.9 million, or $2.16 a share, compared with a
year-earlier loss of $202.5 million, or $2.67. The results included $105.7
million in write-downs on land and other items, a slight year-over-year
improvement. Revenue tumbled 46%.

COMPANIES TO WATCH


Lennar Corp. (LEN) - reports Sept. 21


Wall Street Expectations: Analysts polled by Thomson Reuters expect a loss of
46 cents a share on revenue of $774 million. A year ago, Lennar reported a loss
of 56 cents a share and revenue of $1.1 billion.

Key Issues: Credit Suisse expects Lennar to report a 2.5% 3Q order decline.
But things are looking up: The firm last week improved its estimated loss to 49
cents a share, from a loss of $1.19. It also shaved the predicted land-related
charges "based on the better order trends, as the higher orders imply less need
to cut prices," analyst Dan Oppenheim noted.


KB Home (KBH) - reports Sept. 25


Wall Street Expectations: Analysts project a loss of 58 cents a share and
revenue of $458 million. KB Home's year-earlier loss was $1.87 a share on
revenue of $681.6 million.

Key Issues: No. 5 KB Home has been building smaller and more-affordable
homes, looking to tap the first-timers who, in addition to being eligible for
the credit, aren't saddled with an existing home to sell. The move has also
helped them compete with foreclosures. Zelman & Associates recently upped the
company's quarterly order forecast to 2,839 units, a 21% surge from its
previous prediction.


Pulte Homes Inc. (PHM) - projected to report Oct. 21


Wall Street Expectations: Analysts anticipate a loss of 54 cents a share on
revenue of $968 million, compared with the standalone Pulte's prior-year loss
of $1.11 a share on revenue of $1.6 billion.

Key Issues: Pulte last month acquired Centex Corp., transforming it into an
industry titan. Analysts are keen to see how the deal plays out: Did Pulte's
surprise move call housing's bottom, or is there more pain to come? A key part
of the bigger company's strategy is employing branding to stand out in a sector
known for nondescript product. The Centex moniker lives on for entry-level
homes.


(The Thomson Reuters estimate and year-ago net may not be comparable due to
one-time items and other adjustments.)


-Dawn Wotapka; Dow Jones Newswires; 212-416-2193; [e-mail]


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(END) Dow Jones Newswires

09-17-09 1558ET

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15:58 091709