NEW YORK -(Dow Jones)- NVR Inc.'s (NVR) fourth-quarter earnings fell 3.2% as the home builder reported a lower profit at its mortgage-banking business, though its home-building segment saw improved revenue.
The results beat analysts' expectations, but shares fell about 1% to $776.40 in mid-morning trading.
The industry has lost some momentum since the expiration of a federal home-buyers tax credit last spring. NVR, which builds under monikers including Ryan Homes and Fox Ridge Homes, has benefited from a business model that included limited land ownership, which helped it outperform peers during the downturn.
Reston, Va.-based NVR's profit fell to $58.7 million from $60.6 million. However on a per-share basis, earnings rose to $9.96 from $9.61 on fewer shares outstanding. Revenue increased 9% to $811 million. Analysts polled by Thomson Reuters most recently forecast earnings of $7.38 on revenue of $700 million.
The results come as home builders report bleak results. Sector-giant D.R. Horton (DHI) Thursday reported a loss of $20.4 million, or 6 cents a share, against a year-earlier profit of $192 million, or 56 cents a share. Late Wednesday, builder Ryland Group Inc.(RYL) swung to a fourth-quarter loss of $19.1 million, or 43 cents a share, compared with a profit of $39 million, or 88 cents a share, a year earlier.
NVR's home-building revenue rose 8.8% to $794.5 million. Orders dropped 12%, and backlog fell 17% to 2,916 units at year's end from a year earlier. The cancellation rate rose to 18% from 15%.
Mortgage-banking income declined 10% amid a provision for loan losses of $4.2 million, though the dollar amount of loans closed increased 10%.
The gross margin fell slightly to 17.6% from 18.3% in the third quarter. "We think NVR's margins will likely fall modestly over the next two quarters but remain more stable than peers given its significant focus on the D.C. metro area, which continues to exhibit relative strength in sales and pricing," wrote Dan Oppenheim, a Credit Suisse builder analyst, in a client note.
NVR, which doesn't hold a conference call, has long outperformed its peers, thanks to lessons learned in the last residential downturn. While its peers have written down billions of dollars of lost vale of land and houses, NVR's charges have been minimal.
After emerging from bankruptcy in the early 1990s, the company rebuilt itself by securing land with a small down-payment, or option, and buying when ready to build. Unlike competitors, it wasn't saddled with overpriced land and inventory when the housing bubble popped. Other builders are mimicking the model, though that could mean lower returns as land values appreciate.
--Dawn Wotapka contributed to this report
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