Centex Homes Is a Dallas-Based

Centex Homes is a Dallas-based company that was founded in 1950, activating in the field of home building. As one of the leading U.S. home building companies, Centex has an impressive activity operating in 25 U.S. states, with 35,000 homes built over the past fiscal year (Centex, 2007). Centex's success has been acknowledged by U.S. specialists in the field, being ranked No.1 in its industry on Fortune magazine's list of America's Most Admired Companies. Centex's great financial situation is another factor that adds to the company's success. In the 2007 fiscal year Centex reported $12 billion revenues, $268 million net earnings, and $2.16 per diluted share. Also, in the last quarter of the 2007 fiscal year Centex reported $3.67 billion revenues, $199 million net earnings, and $1.60 per diluted share.

Centex is active in other fields besides home building, like mortgage, title, and insurance. Centex Mortgage Company is actually one of the U.S. largest retail mortgage originators, with almost $14 billion of loans originated in the 2007 fiscal year. Also, Centex Title and Insurance operations provide residential and commercial title insurance and settlement services across the U.S. These services include low-cost property reports and products. Centex Insurance also provides life, auto, boat, commercial, home warranty and umbrella policies to more than 100,000 clients.

The U.S. home building market does not present positive signs for the future: "prospects for U.S. home building look dim but nation's manufacturing sector is showing some signs of a pickup" (Morrison, 2007). Although there has been an unexpected rise in the home building sector in April, as reported by the U.S. Commerce Department, it seems that future building permits reached the lowest pace in a decade. Despite this information, U.S. investors believe that the housing market will stabilize in the near future.

The U.S. current housing market's situation is the following: in April, this sector reached a seasonally adjusted annual pace of 1.528 million units, 2.5% higher than the previous month, although analysts expected 1.490 million pace. The reported 1.518 million March rate was revised by the government down to 1.491 million.

Also, building permits dropped 8.9% in April to a pace of 1.429 million units. The situation regarding the U.S. housing market is not quite clear since housing level is high, on the one hand, but housing permits are very weak, on the other hand. House builders' forecasts are not very bright either, as they believe that "much weaker permits suggest home builders are looking to retrench home building and that would lead to cutbacks in house-related jobs" (Morrison, 2007).

Government regulations have a direct and quick influence on the U.S. housing sector and the companies involved in this sector: "when new construction is more constrained, as measured either by lower supply elasticity or the presence of certain regulations, affordable units are more likely to filter up and become unaffordable, relative to remaining in the affordable stock" (Somerville & Mayer, 2003). Land-use regulations negatively affect all those involved in the housing sector, by raising the price of owner-occupied housing and by reducing access to homeownership, for example. Although these regulations affect buyers and the housing demand in the first place, the negative effects stretch to home builders also, since housing demand practically dictates their activity.