TAKING THE PULSE: U.S. home builders struggled to sell homes -- and make money -- in their first quarters as the sector's multiyear slump drags through the all-important spring selling season.

Homebuyer traffic and sales remain at anemic levels. Bargain-priced foreclosures continue posing stiff competition for builders, while would-be buyers are being stung by strict lending standards. Consumers remain jittery that home values have further to fall.

Monday, the National Association of Home Builders trade group said its closely-watched housing market index slipped one point to 16 out of 100 in April.

There's no relief in sight: The "selling season is coming in below expectations," notes David Goldberg, a UBS home-builder analyst. "We expect the index to remain constrained over the next few months."

Builder KB Home (KBH) earlier this month provided a glimpse about what to expect from its peers in upcoming weeks: Its fiscal first-quarter loss widened sharply as plunging orders fueled a steep revenue drop and charges weighed on the bottom line.

The "operational results were shockingly disappointing," wrote Stephen East, a builder analyst with Ticonderoga Securities, on April 5. "All the headway made during 2010 appears to have been tossed and the bar reset back one year."

To be sure, there are reasons for optimism. The glut of unsold homes that forced six-figure markdowns during the sector's crash has been reduced, leaving a manageable supply. Builders remain flush with cash -- some boast cash hoards topping $1 billion.

And to prepare for recovery -- which has been pushed out to next year -- they are slowly buying new land lots and jump-starting construction in stalled communities. Meritage Homes Corp. (MTH) recently announced an entrance into the Raleigh, N.C., area -- its first new market since 2005 -- while M/I Homes Inc. (MHO) announced the acquisition of a small Texas builder.

COMPANIES TO WATCH

NVR Inc. (NVR) -- expected Wednesday

Wall Street Expectations: Analysts polled by Thomson Reuters expect earnings of $4.68 a share on revenue of $530 million. A year ago, NVR reported net income of $5.01 a share and revenue of $577 million.

Key Issues: You read that right -- NVR could earn money. But NVR, the largest builder by market cap, isn't your traditional operator. It has a risk-averse culture that avoids land ownership and the industry's fastest home-construction turnaround time. It has also generally shied away from the boom-to-bust markets of southern California, Nevada and Arizona, making it a standout in the troubled sector.

PulteGroup (PHM) -- April 28

Wall Street Expectations: Analysts anticipate a loss of $0.13 cents a share on revenue of $813 million, compared with the prior-year loss of $0.03 cents a share on revenue of $1 billion.

Key Issues: Analysts continue watching the 2009 acquisition of Centex Corp. play out, becoming more convinced the sector giant jumped too early and overpaid. At the time, the company touted the benefit of cutting overhead costs and entering new markets. But the housing market has taken much longer to heal than expected, weighing on Pulte's performance.

Standard Pacific Corp. (SPF) -- April 28

Wall Street Expectations: Analysts anticipate a loss of $0.02 a share on revenue of $137 million. That matches last year's loss of $0.02 on revenue of $175 million.

Key Issues: StanPac remains the industry's maverick: While other builders focus on entry level, it builds move-up homes. Competitors are buying small parcels of land here and there, securing it via option rather than paying outright. Standard Pacific, meanwhile, is spending hundreds of millions of dollars on land -- some of it undeveloped -- betting it will benefit as land and housing values increase.

D.R. Horton Inc. (DHI) -- April 29

Wall Street Expectations: Analysts project a loss of $0.04 cents a share and revenue of $756 million. A year earlier, DR Horton made $0.04 a share on revenue of $914 million.

Key Issues: D.R. Horton, one of the sector's largest builders, sells to many first-time buyers, a crowd that hasn't been out in full force lately. That could affect results. On a bright note, there might be some bragging on the earnings call -- Horton beat Pulte for the nation's top builder spot by number of completed annual sales. Last year, Horton closed on 18,983 homes compared with Pulte's 17,095.

(The Thomson Reuters estimate and year-ago net may not be comparable due to one-time items and other adjustments.)

--By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com
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