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St. Joe Says It Will Exit Florida Home Building and Housing Boom Is a Memory: Lennar Is Latest Builder to Fret
Summary: St. Joe Co. (NYSE:JOE) said it will pull out of home building in Florida but will remain in the business of developing its vast land holdings in northwestern Florida into planned communities. The company also expects to reduce its work force of 1,230 full-time employees by about 10%. A St. Joe spokesman said large specialist homebuilders can erect homes more efficiently than St. Joe. The shift in strategy will allow St. Joe to focus on its expertise in planning and obtaining regulatory approvals for communities, he said. The move comes as a result of a recent sales glut in Florida that has forced builders to offer bigger discounts to prospective buyers. In general, it was a tough week for the biggest U.S. home builders, as one company after another slashed earnings guidance to deal with the widespread downturn in the housing market. Lennar Corp. (NYSE:LEN), warned Friday that earnings in its fiscal third quarter, which ended Aug. 31, would be much lower than analysts on Wall Street were anticipating. "The U.S. housing market has continued to deteriorate," said Stuart Miller, Lennar's chief executive. He blamed increased use of sales incentives and certain land adjustments for the shortfall, and cut fiscal-third-quarter guidance to a range of $1.25 to $1.35, down from Thomson Financial's consensus estimate of $1.81. However, Lennar reported only a 5% decline in orders, which is significantly better than its peers. Los Angeles-based KB Home (NYSE:KBH) reported last week that orders for new homes fell 43% in its fiscal third quarter, while Beazer Homes USA Inc. (NYSE:BZH) said orders fell 49% and cancellations surged to 50% in the first two months of its fiscal fourth quarter. Meanwhile, St. Joe Co., had seen orders fall 50% in the first quarter and 55% in the second quarter.
Comment on related stocks/ETFs: For an extensive overview of the Housing Market's current woes, see David Jackson's Housing Bubble and Real Estate Market Tracker.