DETROIT - Pulte Homes on Wednesday swung to a third-quarter loss, hurt by a hefty impairment charge, as the struggling homebuilder’s land lost value amid flagging demand for real estate.
Pulte lost $787.9 million, or $3.12 per share, in the third quarter, compared with a profit of $191.5 million, or 74 cents per share, in the same period a year ago.
Analysts polled by Thomson Financial forecast a loss of 81 cents per share.
The report came the same day that the National Association of Realtors reported an 8 percent drop in the rate of existing home sales for September and a rise in the inventory of unsold homes. Analysts said the backlog will continue to depress new home sales.
Pulte Homes recorded a pretax accounting charge of $1.18 billion, or $3.33 per share, to reflect the losing value of the land it owns. Homebuilders carry land on their books at the value they think they can sell it for once they build a home on it.
Sales of homes plunged 31 percent $2.44 billion. Total revenue, which includes mortgage services, sank 31 percent to $2.47 billion. Analysts expected revenue of $2.38 billion.
“The operating environment continues to be challenged with elevated levels of new and resale home inventory, tightening of mortgage liquidity, and weak consumer sentiment for housing,” Richard J. Dugas Jr., president and chief executive, said in a news release.
Pulte sold 7,468 homes during the third quarter, a 28 percent decline. The average price of a home sold slipped 4 percent to $322,000.
New orders fell 37 percent to 4,572, helping shrink the pipeline of new business to $4.1 billion from $5.8 billion a year ago.
Pulte expects to break even or earn as much as 10 cents per share excluding land-related charges in the fourth quarter.