May 1--M/I Homes' stock rose nearly 12 percent yesterday after it reported an increase in new-home sales during the first quarter.

The Columbus-based home builder said it sold 667 homes in the first three months of the year, up from 554 homes in the first quarter of 2008, for its strongest performance in 18 months.

The biggest jump came in the Midwest, where contracts for new homes rose 45 percent over a year ago.

"We had particularly strong sales in Columbus and Cincinnati, and our new Chicago market is starting to do pretty well for us as well," CEO Robert H. Schottenstein said.

The earnings report pushed M/I's stock to $15.27, its highest closing price since October.

Despite the sales increase, M/I lost $28.1 million, or $2.01 per share, in the first quarter, compared with a loss of $22.2 million, or $1.58 per share, in the first quarter of 2008.

The company said $11.9 million of the loss came from its continued home-building operations. The company also reported a $4 million loss as a result of problems with defective Chinese drywall, which M/I used in some of its Florida homes.

While the sales bump was good news, Schottenstein said he did not know whether that means the worst of the housing crisis is over.

"We're focused on building momentum from the first quarter, but it's far too early to call it a sustainable trend. The general economy remains weak," he told analysts yesterday.

"The single most-important metric that influences housing is job growth," he said. "Even more so than growth, we need to see a slowdown in unemployment as a sign things will get better."

M/I's revenue continued to drop significantly, from $156 million during the first quarter of 2008 to $96 million during the recent quarter.

The company compensated by cutting expenses and improving efficiency, Schottenstein said.

M/I's work force has dropped from about 1,300 employees to 490. The company also sold its corporate plane, executives told analysts yesterday.

"Clearly, the lion's share of expense-cutting is behind us," Schottenstein said. "We think our organization now is right-sized for the level of business we're doing."

jweiker@dispatch.com

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