BZH - Beazer Homes fiscal Q3 earnings beat as rising home prices improve profitability

Beazer Homes ( NYSE: BZH ) fiscal Q3 earnings on Thursday exceeded Wall Street expectations as rising home prices helped to improve the homebuilder's overall profitability, but the "environment for new home sales became significantly more challenging" amid soaring mortgage rates, said CEO and Chairman Allan P. Merrill.

That tough backdrop "negatively impacted homebuyer sentiment and behavior," Merrill added. "While the structural demand for new homes remains quite strong, many prospective customers are delaying purchase decisions.”

Adjusted EPS of $1.76 at June 30 beat the average analyst estimate of $1.42 and climbed from $1.22 at June 30 a year ago.

Q2 revenue of $526.7M, though, missed the consensus of $546.3M and slid from $570.9M in the year-ago quarter.

Adjusted EBITDA of $88.2M in Q2 vs. $78.8M in Q2 2021.

Net new orders for Q2 declined to 925 from 1,199 in Q2 of last year. Cancellation rate of 17.0% in Q2 vs. 10.9% in Q2 2021. Both metrics are pointing to a slowdown in homebuying demand.

Homebuilding gross margin came in at 25.1% in Q2, compared with 20.2% in Q2 2021, mostly driven by pricing increases and lower sales incentives.

"In the quarters ahead, we expect consumers will adjust to a higher rate environment and that builders will modify the size, features and pricing of new homes to address affordability challenges," Merrill contended.

Previously, (July 23) U.S. housing affordability poised to fall to lowest since GFC .

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