M/I Homes Inc. reported third-quarter profit and revenue that rose to record levels, as a 13% increase in average sales prices helped offset a “significant decline” in home buyer demand.
The builder of single-family homes
with a $1.3 billion market capitalization, said before Wednesday’s open that revenue increased 12.4% to $992.8 million, a record for the quarter, even as homes delivered declined 0.9% to 2,026. That’s because the average price of homes sold at closing jumped 13.2% to $487,000.
New contracts for the quarter sank 31.3% to 1,349 homes, “reflecting the significant decline in home buyer demand that began earlier this year, due to the well documented impact of higher mortgage interest rates,” Chief Executive Robert Schottenstein said.
The Columbus, Ohio-based home builder’s earnings report comes as data was released Wednesday showing U.S. new home sales fell 10.9% in September, and mortgage applications declined 1.7% this week as higher rates continued to hurt demand.
Still, M/I Homes stock jumped 4.6% toward a near two-month high. On top of the company’s strong revenue performance, the company reported net income that rose to a record $131.6 million, or $4.67 a share, from $91.0 million, or $3.03 a share, in the same period a year ago.
Looking ahead, the company said it couldn’t tell when the current downtrend in demand would change.
“There is much uncertainty concerning the general economy, and it is unclear when demand for new homes will improve,” Schottenstein said.
That said, Schottenstein said he believes that over the long term, the housing markets will benefit from “strong fundamentals, including favorable demographic trends and an undersupply of housing.”