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Case-Shiller a Harbinger of PulteGroup Pressures

Tickers in this article: DHI LEN PHM KBH NVR

NEW YORK ( TheStreet) -- PulteGroup's(PHM) fourth-quarter earnings report on Thursday may not be all sunshine as home prices continue to fall across the country

The largest U.S. homebuilder by revenue is expected to build on third quarter profit, bouncing back to earnings of 7 cents a share, according to Thomson Reuters, from a 1 cent a share loss in the same period a year ago.

However, the outlook for revenue isn't as rosy. Wall Street expects the homebuilder to see sales drop to $1.13 billion from $1.18 billion in 2010, according to.

In the third quarter, PulteGroup reported revenue growth for the first time in five quarters, with sales climbing 8% to $1.142 billion. But the longer term trend remained negative, with third-quarter revenue down 68% over 5 years.

S&P/Case-Shiller home-price data released Tuesday also does not suggest good things ahead for homebuilders this year as foreclosed properties continue to dampen improvement in the housing market. The key gauge of home prices slipped for a third-straight month, falling 1.3% in November from a month earlier and dropping 3.7% from October.

The composite 20-city home price index, a good measure of home prices nationally, is also highly representative of the markets in which PulteGroup operates. The homebuilder works in 18 of the 20 cities measured, with just Minneapolis and Miami as exceptions -- although the Bloomfield Hills, Mich.-based company does construct homes in 8 other Florida cities.

Analyst recommendations also haven't been too encouraging with 14 of 21 analysts covering PulteGroup rating the company a hold. Analysts from Barclays and Guggenheim Securities joined those ranks with the same ratings earlier this month. Meanwhile, TheStreet Ratings lists the company at sell .

On the other hand, PulteGroup may follow its competitors in showing strong improvement as investors remain optimistic that the housing market is indeed reaching its bottom. Lennar(LEN) kicked off earnings season for homebuilders with some optimism on Jan. 11 when it reported a 20% jump in new orders.

While the Case-Shiller data suggests the housing market has lower yet to go, Lennar Chief Executive Officer Stuart Miller was more positive. "As I look ahead to 2012, I'm cautiously optimistic that we're seeing a real bottom form and we're beginning to see a recovery," he said during the company's earnings conference call.

Investors were optimistic about new orders, sending the stock more than 7% higher on Jan. 11, but the earnings picture was mixed. While revenue climbed 11.8%, net income dropped 5.3%.

D.R. Horton (DHI) also saw an increase in revenue, but managed to grow net income as well. The largest U.S. homebuilder by volume reported earnings of 9 cents a share for the quarter, compared with a 6 cent loss a year earlier, and exceeded analyst expectations by 4 cents.