Beazer CEO says can weather housing slowdown

NEW YORK (Reuters) - The chief executive of Beazer Homes USA Inc. (BZH.N: Quote, Profile, Research, Stock Buzz) on Tuesday said the sixth-largest U.S. home builder is well positioned to combat a possible 6 percent decline in home sales in 2007.

"I would define that as a soft landing, particularly if we don't see dramatic price declines," Ian McCarthy, Beazer's chief executive, said at the Reuters Real Estate Summit in New York. "I think we're going through a normal cyclical downturn. You can't expect to set records every year."

Many economists and analysts expect U.S. housing demand to extend its recent decline as the economy matures and interest rates rise.

Economists widely expect the U.S. Federal Reserve on Thursday to raise its benchmark lending rate to 5.25 percent from 5 percent, its 17th quarter-point increase in two years.

On Monday, a Commerce Department report said seasonally adjusted sales of new U.S. single-family homes rose a surprising 4.6 percent in May from April, though analysts attributed this in part to heavy discounting.

Compared with a year earlier, the May sales pace fell 5.9 percent, and median sales prices fell 4.3 percent.

Atlanta-based Beazer sells homes primarily to less wealthy, often first-time home buyers who are typically more sensitive to mortgage rates. McCarthy said its homes cost about $300,000 on average, but in some areas might cost in the low $100,000s.

Like rivals, Beazer has been offering more incentives to attract home buyers, McCarthy said.

Yet he said Beazer has found no need for heavy layoffs as demand cools. He said the company has recently laid off little more than 100 of its roughly 4,500 employees, including some in the Las Vegas area and in Florida.

On Monday, Lennar Corp. (LEN.N: Quote, Profile, Research, Stock Buzz), the No. 3 home builder, said quarterly profit rose 33 percent as revenue was helped by discounts, but new orders fell.

Beazer and rivals Pulte Homes Inc. (PHM.N: Quote, Profile, Research, Stock Buzz) and Centex Corp. (CTX.N: Quote, Profile, Research, Stock Buzz) this quarter all reported double-digit percentage declines in home orders.