Valley home sales drop for Richmond American Homes

Jennifer Shubinski

Tuesday, Oct. 12, 2004 | 10:58 a.m.

MDC Holdings, which builds under the name Richmond American Homes, reported a drop off in the number of homes sold at its Las Vegas communities in its third quarter earnings report.

The Denver-based company reported Monday that in Las Vegas, it sold roughly six homes per month per community during the third quarter ended Sept. 30, roughly half that of a year ago at the same time.

Despite the drop, it reported strong earnings for the third quarter, driven by an increase in the selling price of its homes nationwide.

"This rate, combined with more communities selling without model homes open, were the primary reasons for our reduced home orders in this market (Las Vegas) during this period," Paris G. Reece III, MDC's executive vice president and chief financial officer said in a news release.

The company had 454 orders for new homes, net cancellation rate, in Nevada during the third quarter compared with 704 in the year-ago quarter. It had a backlog of 1,410 homes ordered but not built in Nevada during the third quarter, compared with 886 in the year-ago quarter.

The company in Nevada closed escrow on 690 homes in the third quarter, compared to 578 in the year ago quarter. Currently in Nevada, Richmond American Homes builds homes only in the Las Vegas Valley.

Despite the drop off in new home orders, the company has maintained its "significant home price increases" experienced at its Las Vegas communities earlier in the year. In some Las Vegas-area communities it continues to increase prices, although at a much slower rate.

The average selling price for Nevada homes closed escrow by Richmond American in the third quarter was $258,300, compared with $185,400 in the year-ago quarter.

"We continue to believe that the market for new homes in Las Vegas in our price points is healthy," Reece said. "With more than 10 new model complexes scheduled to open in the next 100 days, we should be in a good position to capitalize on the strength of the selling season beginning in January."

MDC reported a profit of $105.1 million, or $3.07 per share for the third quarter, up from $65.5 million, or $1.96 in the year-ago quarter.

Revenue grew 28 percent to $1.03 billion.

The company attributed the results to a $33,000 increase in the average selling price on a record number of homes closed, as well as its high home gross margins.