Centex warns of impending $1 billion in charges
National home builder Centex has warned of an impending second-quarter charge of $1 billion, primarily in land value writedowns, following a three-month period of falling home sales combined with lower land values.
Of the approximately $1 billion, Centex paid $850 million to cover declining values of real estate and undeveloped land. The company will release official second-quarter results on Oct. 23.
Centex said home sales fell 13 percent in the second quarter, while it has set aside a provision of $60 million for higher expected losses in the mortgage and credit markets. A provision is an amount of money set aside as an allowance for bad loans, taking into consideration defaults and term renegotiations.
Net home sales dropped to 5,953 units, down 14 percent from a year ago. The company’s backlog of new homes decreased 38 percent to 9,633 units.
Based in Dallas, Centex builds homes in 25 states.