M.D.C. Hopes August Was the Bottom

Management at M.D.C Holdings likes to think that August was it, the absolute lowest point for the housing market. "If it's the low point of the cycle, then over the next few years, there will be rewards for those companies that are able to execute in what we hope will be an expanding market, CEO Larry Mizel told analysts Friday during the company's third-quarter earnings call. The idea that the worst is over might help absolve a bit of the pain of the company's $0.22 a share loss for its third quarter which beat analyst consensus of a $0.31 a share loss. It's also a significant improvement from the $0.69 a share it lost in the same quarter last year. Unlike many of the public builders who have reported third quarter results so far, M.D.C., which builds under the Richmond American name, was able to increase closings by 10%, to 722 homes from 659 in the third quarter of '09. Revenue, too, was up by 11%. The route to recovery lies in increasing revenue and growing community count rather than cutting more costs, management said during the call. The company's orders for the quarter, which were 796 compared to 1,114 last year's same quarter, might have been worse had it not been for a major sales promotion it ran in September after both July and August provided sales that were lackluster at best. That sale doubled September orders compared with July and August. It featured an interest rate just north of 3% that the company had bought down for buyers and came at the expense of higher Realtor commissions and some pricing concessions.

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