Home builders Horton, Meritage post lower sales

CHICAGO (Reuters) - Home builders D.R. Horton Inc. <DHI.N> and Meritage Homes Corp. <MTH.N> posted lower quarterly sales on Tuesday, which analysts said was a sign the housing market has yet to bottom out.

D.R. Horton reported net sales orders of $2.3 billion for the fiscal first quarter ended December 31, down from $3.2 billion a year earlier. This was well below analysts' average forecast of $2.74 billion as compiled by Reuters Estimates.

In a statement, D.R. Horton Chairman Donald R. Horton blamed the decline on "challenging" selling conditions.

D.R. Horton's cancellation rate fell to 33 percent from 40 percent in the previous quarter.

Morningstar analyst Eric Landry said the figures indicated the housing market has not yet reached its lowest point.

"The market is declining at a slower rate, but it's still declining," Landry said. "The question now is when we are going to reach the bottom and how far we have to go."

Meritage reported net sales of 1,201 homes totaling $356 million in the fourth quarter, down sharply from 2,072 homes totaling $723 million a year earlier.

Fourth-quarter revenue was also down at $821 million, compared with $1.04 billion a year earlier. However, revenue came in above Wall Street forecasts for $742.3 million.

Meritage Chief Executive Officer Steven Hilton said sales continued to decline because "demand remains slow in most of our markets."

Morningstar's Landry said Meritage is more sensitive to changes in the market because of its regional focus on hot markets.

"When things are good, they're really good for Meritage, but when they are bad they're really bad," he said.

D.R Horton shares were up 6 cents at $25.45 in midday trade on the New York Stock Exchange, while Meritage was down 37 cents at $43.05.

Analysts said the shares were not sharply lower because investors have already priced in bad news following months of woes for the U.S. housing market.

D.R. Horton is trading nearly 40 percent below its 12-month high of $41.66, reached on January 11, 2006. Meritage is also close to 40 percent below its 12-month high of $68.34, reached on April 26, 2006.