Builders Report More Declines in Florida, U.S.

A major U.S. home builder reports that its contracts for new homes fell 35 percent overall, and a staggering 47 percent in the-once sizzling Florida housing market for this past fiscal quarter.

M/I Homes, Inc., the nation’s 21st-largest builder, was one of the first companies to report on the quarter and how the home-building sector is feeling the heat. D.R. Horton, Inc., the largest U.S. home builder by number of sales, is scheduled to report quarterly orders on Thursday.

U.S. home building stocks are at their lowest point in more than 20 months, as measured by the closely followed Dow Jones U.S. Home Construction index.

“Here’s your first piece of data from the companies that report on the quarter and it doesn’t look good. It looks pretty bad,” Avondale Partners analyst Barbara Allen said.

M/I Homes CEO Robert Schottenstein echoed that statement.

“New contracts for the quarter were negatively impacted by a combination of factors, including softening demand, increased cancellation rates and higher unsold inventory levels,” he said. “As evidenced by these factors, housing conditions in most of our markets are challenging. We do, however, estimate that we will deliver a record 4,500 homes in 2006.”

Several home builders in the Sunshine State have reported no signs of distress, but others have lowered their financial forecasts in recent months, citing slowing demand amid rising Florida home loan rates and inventory available for sale. M/I Homes said new contracts in the three months ending June 30 fell to 764 from 1,172 in 2005, and its heaviest declines were seen in Florida, Ohio and Indiana.

Through the first six months of the year, new contracts are off 16 percent from last year’s pace. This report comes amid increasing concern that the housing market downturn will mean widespread economic disarray in many parts of the U.S. It will be interesting to monitor more projections from the industry’s major players over the coming weeks and months.