William Lyon Homes, a home construction company from Newport Beach, California, experienced declining sales during the 2010 third quarter. For the July-September period, the home builder posted a 34% decline in the number of customers who sign purchase orders with the company.
The builder has announced, through its quarterly earnings report, that it is considering offering higher discounts to improve sales figures. The report revealed that sales incentives might be higher in the coming quarter. The home builder is also reportedly considering using other marketing techniques to improve home-buying demands and to increase sales absorption among the housing markets where it operates.
Despite falling sales figures, William Lyon did benefit from improved housing prices which contributed to the higher margins of profit and revenue posted by the company during the quarter in focus. Revenue for the company rose by 12% during the July-September quarter. The firm builds houses in California, Arizona and Nevada.
Third quarter earnings statistics showed that the home construction company posted net losses of $8 million. This marks the third quarter in a row that the firm has recorded a loss. A total of 163 new residential property orders were posted in the quarter, which translates to a 34% drop when compared with the 246 houses ordered during the same period of 2009.
The company's earnings update revealed that part of the reason for the decline in sales is that the firm had fewer property developments with active housing sales. Average home sales figures per development project declined to 9.1 per home sales location compared with the same 2009 quarter when the average was at 10.3. Total closing escrow also declined by 15% for the current year's third quarter.
One aspect of the company's earnings figures that showed some positive movement is gross profit produced through home sales. Profit from house sales rose by 71%, giving William Lyon $11.6 million in this department. Gross profit margin also jumped to 15.7% which is considerably higher than the 12.1% average posted during the 2009 third quarter.
Improved profits from housing sales were attributed by the home construction company to higher residential property prices in its key markets. Although William Lyon posted another loss, the amount is less than the loss incurred in the third quarter of 2009.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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