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M/I Homes orders fall as average closing prices decline

M/I Homes reported fewer new home contracts and deliveries in the third quarter, alongside a lower average closing price. Revenue and profit declined, and the sales value of its backlog decreased. Management linked difficult conditions to higher mortgage rates, weaker demand and economic uncertainty. The company nevertheless ended the quarter with an unused unsecured credit facility.

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Generated view of newly built homes with varied brick and siding facades along an American residential street.

New contracts decline in the third quarter

M/I Homes reported 1,861 new home contracts in the third quarter, down 2 percent from a year earlier. The US homebuilder released the results on October 21. The decline followed a year-earlier quarter with 1,908 contracts.[1], [2]

Deliveries fell 2 percent to 2,241 homes. The average closing price declined from 477,000 dollars to 460,000 dollars. Revenue fell 5 percent to 1.076 billion dollars. Net income decreased from 106.5 million dollars to 66.6 million dollars, and inventory charges totaled 4.7 million dollars.[1]

Backlog value falls as communities expand

The September-end backlog comprised 2,046 homes, compared with 2,189 a year earlier. Its sales value declined 9 percent to approximately 1.1 billion dollars. M/I Homes operated 246 communities, up from 233. Cancellations remained at 12 percent. Management attributed difficult conditions to higher mortgage rates, weaker demand and growing economic uncertainty.[1]

Cash remains available and the credit facility is unused

M/I Homes held about 621 million dollars in cash and 3.3 billion dollars in shareholders’ equity. Its 900 million dollar unsecured credit facility had no borrowings outstanding. Homebuilding debt represented 18 percent of capital, while net debt represented 2 percent. The company repurchased 50 million dollars of shares during the quarter.[1]

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References

  1. News sourceM/I HomesM/I Homes orders decline despite lower average closing price↩1↩2↩3↩4
  2. News sourceThe Motley FoolM/I Homes new home contracts decline 2 percent↩
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