Standard Pacific Corp. said Tuesday it bounced back to a third-quarter profit from a year-ago loss as average sale prices improved and the homebuilder booked smaller charges.
However, contracts for new homes, excluding joint ventures, tumbled 38 percent reflecting a sharp drop in housing demand this summer following the end of federal homebuyer tax credits.
The weak U.S. economic recovery, stubbornly high unemployment and sluggish job market continue to keep many would-be homebuyers on the sidelines despite mortgage interest rates falling to historic lows. Standard Pacific, which has operations in eight states including California, Florida and Texas, said completed home sales fell 33 percent to 599 from 893 homes during the quarter.
Still, the average sales price climbed 14 percent to $345,000 from $302,000.
The builder reported net income of $4.5 million, or 2 cents a share, for the three months ended Sept. 30. That compares with a loss of $23.8 million, or 10 cents a share, in the same quarter last year.
The prior-year results included $17.8 million in charges related to write-downs on land sales, early debt payoff and restructuring costs. The latest quarter included only a $1 million charge related to paying off debt early. And price increases in Southern California and lower construction costs helped lift the builder's gross margin on home sales to 23.6 percent versus 18.6 percent a year earlier.
The decline in new home orders drove down the value of the company's backlog, which represents future housing revenue, by 35 percent to $214.2 million, or 605 homes. In all, Standard Pacific's homebuilding revenue declined to $207.5 million from $327.4 million.
Analysts polled by Thomson Reuters had expected, on average, a loss of a penny a share on revenue of $220 million.
President and CEO Ken Campbell said the company's ability to turn a profit while delivering 1.5 homes per community every month bodes well for when the housing market recovers.
"Unfortunately it appears that the nation's economic recovery may take longer than many anticipated," he said.
Despite sluggish homebuyer demand, Standard Pacific continued to load up on new land.
The builder bought about 2,000 lots for $93 million during the quarter. Through the first nine months of the year, the company has acquired about 4,600 lots valued at $281 million.
Standard Pacific shares slipped a penny to close at $3.71 on Tuesday.