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alstry (< 20)

HB Cancellations from Backlog Skyrocketing????



June 16, 2008 – Comments (5)

SPF reported its order trends tonight.  Remember, and order is just that, an order....some builders call it a sale....but it does not become revenues until it closes.

Last year SPF had almost twice as much backlog at the end of the 1st quarter as it did this year. Approx $950MM vs. $500.

Thus with net order rates tracking pretty close, SPF cancellation rate as a percentage of beginning backlog is much higher this year than last year. It appears SPF's cancellation rate as a percentage of backlog is approaching 40% vs. about 25% last year.   Almost one out of two homes in backlog

Is SPF being more agressive taking orders to make the order rate look better only to have them cancel before closing?


Remember folks, anyone can take orders, it is much harder to close. Further, we have no idea what prices they were taking those orders at....we do know that they are liquidating entire communities at over 40% off.

It would have been nice if they provided an average selling price for those orders...ya think???

Now the question is whethter they losing $$$$  on every order????


And think, this is the kind of disclosure they give to shareholders that they will be asking to invest  tens of millions of more dollars.

5 Comments – Post Your Own

#1) On June 16, 2008 at 6:15 PM, alstry (< 20) wrote:


From SPF press release....orders:

down 34% in Texas, down 59% in the Carolinas and down 64% in Colorado!!!!!

And that is after likely substantial much money are HBs losing???

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#2) On June 16, 2008 at 7:53 PM, jesusfreakinco (28.18) wrote:

Did you see this article:

SoCal Home Prices Plunge 27%

Is it really surprising that sales are up in CA? 

To your point, Al, mgt continues to try to deceive the market by posting part, but not all of the information.  Isn't it deceving to product sales, but not prices? 


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#3) On June 16, 2008 at 8:17 PM, jesusfreakinco (28.18) wrote:

Here is Mauldin's missive:

I highly recommend it and it is FREE!

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#4) On June 16, 2008 at 9:56 PM, alstry (< 20) wrote:

This maybe the highest percentage of backlog cancellation rate so far of a detached builder.

It would also be consistent with a rapidly declining price environment.  If you had purchased a home a few months ago, and the BS builder was liquidating the same house at 40% off in the same community, would you close or cancel?

My guess is cancelation for other builders are going to skyrocket from this point forward as much of spec inventory has been sold off.

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#5) On June 17, 2008 at 2:08 PM, hansthered0 (< 20) wrote:

Tricky...nice research.

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