Centex CEO: Reviving housing key to US economy | Business news | Chron.com – Houston Chronicle

Centex Corp.’s chief executive said the homebuilder’s sales plunged in the third quarter because would-be homebuyers were put off by worries over the souring U.S. economy, and stressed that economic stimulus legislation working its way through Congress won’t work unless it’s also aimed at reviving home sales.

“Recent economic and credit market shocks caused unprecedented buyer hesitancy during the quarter,” Timothy Eller said during a conference call with Wall Street analysts on the company’s fiscal third-quarter 2009 results. “As unemployment rose and consumer confidence fell, buyers remained firmly on the sidelines.”

That hurt sales, particularly early in the quarter, but the builder beefed up incentives and managed to lift the pace of sales in December and into January.

“We sold more homes in December than October and November combined, and January was better than December,” Eller said.

Still, the builder’s new home orders for the quarter sank 80 percent from the prior year, while completed sales were cut in half.

Eller said that government efforts to jumpstart the economy must help spur housing sales.

“We believe that there can’t be a viable stimulus package without stimulating housing,” Eller said. “We have to absolutely stimulate the demand side of housing in order to begin provide some price support for the prices that are continuing to decline and, of course, absorb these continuing foreclosures.”

Builders are lobbying Congress for expanded aid for homebuyers. President Barack Obama’s $819 billion stimulus plan, which passed the House last week and is now in the Senate, includes a $7,500 tax credit for first-time homebuyers who act in the first half of the year.

The builders, however, are pushing a larger credit that would last for all of 2009, while Eller has advocated for a tax credit between $10,000 and $22,000.

Dallas-based Centex reported late Tuesday it narrowed its loss to $663.9 million for the three months ended Dec. 31, from a loss of $975.2 million in the prior year period.

Revenue dropped 53 percent to $872.2 million.

The results missed Wall Street estimates.

Eller noted that the company’s order cancellations declined to the lowest level in two years by the end of the quarter, and said the company expects to generate positive cash flow from operations in the fourth quarter and its next fiscal year.

Like other builders, Centex has sought to cut costs and preserve cash amid falling sales. By the end of the next quarter, the builder expects to have reduced its work force by 70 percent from where it stood at the start of its fiscal year, management said.

The builder also said it expects to further reduce land-related spending in the next fiscal year.

Centex shares rose 38 cents, or 4.1 percent, to $9.56 in midday trading Wednesday.

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On the Net:

Centex Corp.: http://www.centex.com