NEW YORK (Reuters) - Shares of major homebuilders led the broader market down on Thursday, a day after Pulte Homes Inc and Ryland Group Inc reported quarterly losses and Pulte said a bottom was nowhere near.
Pulte fell 20.4 percent to $7.92, while Ryland slid 15.7 percent to $15.09 on the New York Stock Exchange early Thursday afternoon. The Dow Jones U.S. Home Builders index <.DJUSHB> was down 13.3 percent. The broader market, as measured by the Standard & Poor's 500 index <.SPX>, was down 1.3 percent.
Pulte posted a narrower quarterly loss due to lower writedowns. But the No. 4 U.S. builder painted a bleak picture of the future, and No. 9 Ryland posted a wider loss.
The U.S. housing sector, mired in its worst slump since the Great Depression, continues to flail as subprime borrowers, who were extended credit despite their high-risk profile, default on mortgages. Defaults push foreclosures and inventory up and prices down, which puts growing numbers of homeowners "underwater" on their mortgages -- owing more than their homes are worth.
"Looking forward, it appears that a bottom in the housing market may not come for some time," Pulte Chief Executive Officer Richard Dugas said on a conference call with analysts.
The excess supply of homes, exacerbated by the increase in foreclosures, has combined with economic turmoil to keep buyers out of the market, despite price cuts by builders and a $7,500 federal tax credit to first-time buyers, the company said.
Even a year ago, Pulte was able to generate sales by cutting prices. Today, despite efforts to bring prices level with those on foreclosed homes, the overall lack of demand is translating into dismal sales.
Ryland is contemplating shutting down communities where further price cuts do not make financial sense, Chief Executive Officer Chad Dreier said during a conference call with analysts. Earlier in October, Lennar Corp
The fate of Ryland's dividend is likewise up for discussion at a board meeting in early December, Dreier said.
In October, U.S. homebuilder sentiment sank to an all-time low despite massive global efforts to stem consumer panic, the National Association of Home Builders said on Thursday.
For the year to date, homebuilders' shares are down 36 percent, about even with the broader market. On Thursday, shares of Atlanta-based Beazer Homes
"I look forward to the day when the majority of our operational highlights no longer consist of our effectiveness in shrinking the company. Unfortunately, that is the environment we're in," Dreier said.
(Reporting by Helen Chernikoff; additional reporting by Lynn Adler; editing by John Wallace, Richard Chang)
