Meritage posts fourth-quarter loss versus profit

NEW YORK (Reuters) - Home builder Meritage Homes Corp on Monday posted a net loss for the fourth quarter compared with a year-earlier profit, in part because of lower sales and charges for lower land values reflecting the slumping U.S. housing market.

The housing market has been in a tailspin for more than two years, hounded by falling prices and evaporating demand.

On Monday, the Commerce Department said sales of new U.S. single-family homes in December plummeted a record 26 percent in 2007 and builders slashed prices by the most since 1970.

Sales in December fell 4.7 percent to an annual rate of 604,000, the slowest pace since 1995, from a downwardly revised rate of 634,000 in November.

"This has been the most difficult year we've experienced in homebuilding in more than 25 years, and we currently expect 2008 will also be challenging," Steven Hilton, Meritage's chairman and chief executive, said in a statement.

Meritage reported a fourth-quarter net loss of $128.8 million or $4.91 per share compared with a profit of $9.02 million or 34 cents per share in the year-earlier quarter.

The fourth quarter net loss included $130 million of pretax real estate-related and joint venture valuation adjustments and $58 million of pretax goodwill write-offs. It also incurred an $11 million noncash pretax charge for the acceleration of expenses related to the cancellation of employee stock options and a $3 million impairment of golf course assets held for sale.

The fourth quarter of 2006 included a pretax charge of $63 million for lower real estate values.

To combat the impact the deteriorating U.S. housing market has inflicted globally, the Federal Reserve last week slashed the benchmark federal funds target rate by 75 basis points and the government is mulling mortgage rescue and economic stimulus plans.

In response to the deteriorating market, U.S. home builders have shifted their focus from profit and growth to survival, focusing on generating cash to pay off debt and getting rid of the excessive land and inventory they accumulated during the boom times.

During the quarter, Meritage reduced its speculatively built home inventory by 10 percent, cut its purchases under options by about $55 million, and acquired about 650 fewer lots than it did the prior quarter.

The company generated cash, reducing its bank debt by $153 million, to a balance of $82 million at December 31. The company has a target of reducing its credit facility debt to a zero balance by the third quarter, and then start accumulating cash reserves.

(Reporting by Ilaina Jonas, editing by Phil Berlowitz)