Higher interest rates, more unsold homes, falling affordability and weaker homebuyer confidence contributed to a drop in profit at Irvine-based Standard Pacific Corp. in the second quarter.
Standard Pacific said its profit in the quarter was $96.5, down 10% from a year ago.
The housing conditions “have resulted in lower sales rates and higher levels of cancellations, which have given rise to a greater use of incentives and other forms of discounting,” said Stephen Scarborough, chief executive of Standard Pacific.
Homebuilding revenue for the company was up 5% to a record $1 billion from a year earlier. Standard Pacific now expects 2006 revenue of $4 billion,roughly 95% of its target.
“We are clearly facing an increasingly competitive environment in most of our major markets across the country,” Scarborough said.
The company reported a 2% decrease in new home deliveries for the quarter, compared to a year ago. In California, 703 home deliveries were made in the quarter, down 8% from a year ago.
The drop was more pronounced in Northern California, where deliveries were down 41%. The company did well in its back yard: In Southern California, deliveries were up 12% from last year.
During the second quarter, Standard Pacific’s average home price increased 8% to $374,000. The company’s average home price in California was $729,000, up 10% from a year ago.
