While home sales continue to be sluggish, Ryland Group Inc. on Wednesday said it turned to a profit in its fourth quarter, primarily due to earlier cost cutting and higher gross margins on sold homes.

After the markets closed, the Calabasas home builder reported net income of $39 million (88 cents per share), compared with a net loss of $59.9 million (-$1.40) a year earlier. Revenue fell 20 percent to $418 million.

Excluding inventory valuation adjustments and write-offs, as well as an income tax benefit, earnings would have been $4.7 million (11 cents). Analysts surveyed by Thomson Reuters on average expected the company to report an adjusted per-share loss of 26 cents on revenue of $391 million.

Homebuilding revenue dropped 21 percent to $405 million due to fewer closings and lower sales prices. Closings were down 15 percent and the average closing price of a Ryland home fell 3.7 percent to $237,000.

For fiscal 2009, Ryland reported a net loss of $162 million (-$3.74), compared with a loss of more than $396 million (-$9.33) in 2008.

Shares earlier closed up 65 cents, or 3 percent, to $21.55 on the New York Stock Exchange.