Dave Phillips, CEO of the Charlottesville Area Association of Realtors, recently said that the slumping housing market needs an infusion of new homebuyers to jumpstart sales. But a look at two companies’ recently released third-quarter reports, not to mention the seismic uncertainties in the credit market, could make potential homebuyers sit on their wallets and take a wait-and-see approach.
Ryan Homes, a major homebuilder in the Charlottesville area, has eight local developments, including Abington Place and Cherry Hill. Its parent company, NVR, took a beating in the third quarter, seeing its earnings per share drop 22 percent compared to this time last year. NVR also posted a loss in net income for the quarter.
Blaming its third-quarter losses on the continuing deterioration in market conditions, NVR broke more bad news to its shareholders. The company warned that it is "improbable" that it will meet performance expectations for 411,000 stock options.
There was some good news, sort of. NRV’s homebuilding unit, of which Ryan Homes is a part, did report an increase in new orders for the third quarter, up 12 percent from the third quarter of 2006. But the company attributed the increase to an especially weak quarter in 2006. Those new orders, the report said, slowed significantly in August and September when the credit markets began their later-summer meltdown.
Mortgage company Countrywide Financial held a conference call with shareholders on October 26 to try to put some sort of positive spin on a third quarter in which the company, perhaps the lender hardest hit by the implosion of the subprime section of the market, reported a net loss of $1.2 billion. Countrywide officials said that the company would rebound and see profits in the fourth quarter. They also pointed to a new stakeholder: Bank of America recently sank $2 billion into Countrywide, saying that the mortgage company was undervalued.
Countrywide posted a $1.3 billion pre-tax loss in its mortgage banking segment. It also reported a $334 million capital market loss as the company quickly made major restructuring changes to stay viable as investors began pulling money out of mortgage-backed securities.
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