By Heather Struck for Forbes.com Feb. 23 2011 - 10:10 am
The Department of Commerce said Wednesday that real GDP declined by 2.4% by metropolitan area in 2009, after a 0.4% decline in 2008. The drop in production appeared in 292 of 366 MSAs, reflecting the slow-down in manufacturing and construction, that took place that year.
Meanwhile, luxury builders Meritage Homes and Toll Brothers are beating the Standard & Poor’s Supercomposite Homebuilding Index this year to date, reflecting a gradual recovery out of 2009’s near stand-still for the housing market. Meritage has returned 14.6% this year and Toll Brothers has returned 9.3% compared with 2.9% for the S&P homebuilding index. Shares of Meritage were down slightly Wednesday by 0.3%, while Toll Brothers shares saw a 2.5% gain.
Toll Brothers reported a profit for its first quarter ending January 31, with net income at $3.4 million, or 2 cents per share, compared with a loss of $40.8 million, or 25 cents per share, in the year-ago period. The profit beat the 7 cents per share loss that analysts were expecting for the quarter. The Pennsylvania-based company also reported net revenue of $334 million, up from $326 million the year before.
The average price of homes sold increased to $586,000 from $548,154 a year earlier, while the number of new homes sold grew by 4%. The company ended the first quarter with more units in its backlog of 1,472, but a 2% decrease in value at $825.2 million.
Toll Brothers’ CEO Douglas C. Yearley, Jr., said that, “The market is still tough; the home buyer is still wary. Although our customers recognize that this is perhaps the best time to buy in many years, so far the market is not generating the positive momentum that creates urgency among buyers.”
Home improvement stores are also improved in their last quarter. Lowe’s reported a 39% increase in its fourth quarter profit, boosted by higher-than-expected sales for the quarter. The announcement came after Home Depot, the larger company by revenue, said on Tuesday that its fourth quarter profit increased by 72% from the year-ago period.
Lowe’s reported a profit of $285 million, or 21 cents per share, and revenue up 3% at $10.5 billion for the quarter ending January 28. Analysts polled by Thomson Reuters were expecting profit of 18 cents per share on revenue of $10.4 billion.
Home Depot’s fourth quarter profit soared to $587 million, or 36 cents per share, on revenue of $15.1 billion, beating analysts’ expectations for net profit of 31 cents per share on revenue of $14.8 million. The company said same store-sales growth in the U.S. helped it beat the consensus.
Markets opened Wednesday lower than its previous day’s close, still pressured by rising oil prices and political heat created by protests in the Middle East. The Dow Jones industrial average was down 41 points at 10 am at 12,171, the Nasdaq was down 9 points at 2,747 and the S&P 500 was down 2 points at 1,312.
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