Pulte exceeds Q1 2017 profit projections, falls short on revenue

Dive Brief:

PulteGroup posted higher-than-estimated profits for Q1 2017, Reuters reported, thanks to an increase in home sales and home prices. While total revenues reached $1.63 billion, an increase of 13.7% for the period, the figure missed analyst projections of $1.75 billion.
The builder also saw an increase in net income of 28 cents per share and had an 8.4% increase in orders to 6,126 homes during the quarter.
In a call with analysts, Pulte stated that it is well-positioned across buyer groups, with diversification of price points and expansion opportunities among first-time buyers and active adult shoppers.

Dive Insight:

The nation’s third-largest builder, Pulte’s first-quarter numbers follow a successful fourth quarter of 2016, which saw a 15% increase in orders and a 19.7% rise in profits from a year earlier.

Discussing the latest quarter, Pulte representatives projected optimism, noting that initial concerns over rising interest rates have not tempered buyer demand in early 2017. They pointed to job growth, mortgage rates that are still comparatively low and low inventory levels as contributors to the favorable sales environment.

“We have a positive view on the overall housing demand and believe that economic improvement, jobs, consumer confidence and limited housing supply will continue to provide long-term support for new home sales,” said Pulte President and CEO Ryan Marshall. “These factors along with favorable demographics will continue to work in our favor. While the potential for higher rates and any resulting impact on affordability must be watched, we are optimistic about buyer demand and overall supply dynamics going forward.”

The builder continues to maintain a diverse portfolio, with 29% of closings during the quarter to first-time buyers, 44% in the move-up/luxury category and 27% in the active adult segment — figures that are similar to those reported last quarter. Meanwhile, home prices rose an average of 6% year-over-year across the company's offerings, while those targeting first-time buyers increased 10% to $277,000.

Marshall stressed the continued importance of the company's active adult properties as much as targeting millennials. He said the company will pursue opportunities with both demographics going forward. He also noted that not only are boomers a large generation with the most wealth, but their children are also mostly millennials. As the younger generation is increasingly able to buy their first homes, their parents will be freed to downsize or relocate — moves they may not have been able to make before.

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