Centex Sells Land, Mortgage Business Down
The home builder Centex is out with the past quarter and fiscal year results. It is a lot to take in, but here's something unusual. "The housing gross margin improvement was driven primarily by an increase in the average selling price of homes delivered..Additionally, land sales contributed 40 basis points of the 200 basis point gross margin improvement."
So Centex is selling land and that made up 25% of the increase in GM. Let's poke around the mortgage division. "Operating earnings from CTX Mortgage Company totaled $21 million for the fourth quarter of fiscal 2005, 21% lower than $27 million for fiscal 2004's fourth quarter. Originations from Centex Homes' closings increased 4% while retail originations fell 18%. Fiscal 2005 operating earnings from CTX Mortgage Company were $96 million compared to $166 million for the same period a year ago."
That fall could be attributed to a widening credit spread for the firm. "CTX Mortgage provided mortgage loans to 73% of Centex Homes' buyers for the fourth quarter."