Beazer Homes USA Inc cut its full-year outlook for new home orders after the expiration of a federal homebuyer tax credit, saying potential buyers remain cautious amid high unemployment and continued foreclosures.
Shares of the eighth-largest U.S. builder fell 3.3 percent to $4.39 in early trading.
Although housing affordability is at record levels, prospective home buyers continue to exercise caution in committing to a home purchase transaction, Beazer said in a statement.
Beazer and other homebuilders had benefited from a federal tax credit for first-time home buyers, but the credit expired in April.
The company said it expected to log orders for 700 to 800 new homes for the fourth quarter ending this month, which could mean the total for the fiscal year could show a decline.
It had previously forecast a rise in full-year orders, with at least 767 coming in the fourth quarter. In the year-earlier quarter, orders topped 1,000, boosted by tax incentives.
The company still expects full-year gross margins, excluding inventory impairments and abandonment charges, to exceed the 11.7 percent of the prior year.
The expiration of the government tax credit has pulled the rug out from under home builders that earlier this year had seen a rebound in sales that many hoped reflected improving fundamental demand.
But in July, new home sales were at their slowest pace since the U.S. Commerce Department started tracking them in 1963. And data from an industry group showed an unexpectedly large drop in existing home sales, fueling worries that the economic recovery was losing traction.
New home sales will remain challenged until U.S. employment improves and home foreclosures slow down, Beazer said on Wednesday.
The Atlanta-based company also cut its full-year expectations for land and land development spending to below $200 million from its prior view of $200 million to $220 million. Beazer said it could hold off on development spending, as many of its investments are aimed for its 2012 fiscal year.
U.S. homebuilders, which lost hundreds of millions of dollars when land they bought during the housing boom lost value after the bust, are bidding up lots despite new softness in the market. If demand for new homes does not revive, these lot purchases could jeopardize profitability into 2012, when the companies would build on land they are currently buying.
Rival U.S. builders Lennar Corp and KB Home are set to report their fiscal third-quarter results next week.
(Reporting by Nick Zieminski in New York and A.Ananthalakshmi in Bangalore; Editing by Savio D'Souza and Lisa Von Ahn)