Ryland Sees No Market Improvement
Ryland’s net sales also fell 17 percent year over year in the second quarter, from 3,023 in 2006 to 2,521 this year. Compared to the first quarter of 2007, sales were down most in Texas, and off in the Southeast and North, but Ryland’s sales in the West were actually up 7 percent, Dreier said.
“Sales trends improved as the quarter progressed, although I’m hesitant to read too much into this, as the selling environment continues to be challenging across the country,” he said.
“Our sales were up in the West, and the only thing I read into that is that we had a really lousy year last year in Vegas, Phoenix, and California,” Dreier said.
Indeed, Ryland saw its cancellation rate jump from 28 percent in the first quarter to 34 percent in the second quarter. Dreier put the blame for the spike in cancellations on high inventory levels that make it harder for would-be buyers to sell their homes, forcing them to back out of closings.The company’s backlog at the end of the second quarter decreased 39.2 percent to 4,953 units from 8,151 units in 2006.
Ryland is also shifting its product mix from traditionally one-third each of entry-level and first and second move-up products to roughly 20 percent entry-level and 40 percent each for first and second move-up.
“We’re doing less true entry-level, it’s just harder, and the numbers don’t work,” Dreier said.
Wow! This is the fourth article in the last week that highlights the plight faced by major builders. The last couple sentences are very telling however - entry-level housing is not profitable enough for developers.
29 July 2007 | Business, Construction, General | Comments
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