WCI Communities Inc. (WCIM), a housing company that left bankruptcy four years ago, lowered the price range of its initial public offering as investor demand for U.S. homebuilder stocks slips.
The builder plans to sell 6.82 million shares for $15 to $17, according to a regulatory filing today. That’s reduced from the $21 to $23 a share the Bonita Springs, Florida-based company sought when it set terms for the offering last week.
“WCI has drawn substantially lower initial interest in its IPO than it expected, coming also at a time when homebuilding stocks are in a slump since May,” Vicki Bryan, an analyst at Gimme Credit LLC in New York, said in an e-mail. “The company is moving forward now anyway despite less-favorable market conditions and knowing it could net nearly 30 percent less than it thought just a week ago. This rings with desperation.”
Homebuilder stocks, which soared earlier this year, have fallen about 8 percent in the past three months amid investor concern that rising mortgage rates may reduce buyer demand. UCP Inc., a homebuilder and land developer based in San Jose, California, sold stock in an IPO last week for $15 a share, the low end of its projected range. UCP was trading at $14.17 at 1:25 p.m. in New York.
The market for new homes remains solid, with sales rising more than forecast in June to the highest level in five years, Commerce Department data showed today. Purchases of new homes climbed 8.3 percent from the previous month to an annualized pace of 497,000, the most since May 2008.
The Standard & Poor’s Supercomposite Homebuilding Index dropped as much as 3.7 percent today. The decline is tied to investor concern that housing affordability will weaken, rather than a reflection of the current new-home market, said Bob Curran, managing director at Fitch Ratings in New York.
“As you move up the cycle, anything that actually hurts or is perceived to hurt fundamentals going forward can lead to people exiting the stock, especially those who have built in some considerable profits,” he said in a telephone interview.
WCI’s filing last week said stockholders planned to sell another 1.59 million shares. Today’s filing removes that reference.
To contact the reporter on this story: Prashant Gopal in Boston at email@example.com
To contact the editor responsible for this story: Kara Wetzel at firstname.lastname@example.org