One reason for all these unexpectedly large losses from U.S. homebuilders is the homebuilders dumping all their losses into this year so next year they can say they’ve turned the corner.
Arizona’s Meritage Homes just announced a much higher loss than expected.
Meritage reported a third-quarter a net loss of $119 million, or $4.52 a share, compared with a profit of $60 million, or $2.25 cents per share, last year.
Analyst on average expected Meritage to report a loss of $2.15 per share according to Reuters Estimates.
Homebuilders have been incapable of lowering their inventory of home for sale despite the fact that the market peaked more than 2 years ago! Their incompetence has been an additional drag on prices for resale homes.
I’m personally testing a theory that homebuilders are structurally incapable of controlling their inventory and significant inventory reductions in new homes will not take place until some homebuilders go out of business.