PulteGroup Q1 loss narrows
Bloomfield Hills, Mich.-based PulteGroup reported a net loss of $12 million for the first quarter ended March 31, compared with a net loss of $40 million in the prior-year quarter. Reported net loss includes $6 million of land-related charges, which were offset by $6 million of land-sale gains.
Home sale revenues in the first quarter increased 4% to $814 million, compared with $782 million in the prior year. Higher revenue for the quarter reflects a 5%, or $12,000, increase in average selling price to $261,000, partially offset by a 1% decrease in closings to 3,117 homes.
"PulteGroup’s first-quarter financial results demonstrate further success in our efforts to reposition the business and drive better long term financial returns," said Richard J. Dugas Jr., PulteGroup chairman, president and CEO. "For the quarter, improved gross margins and excellent control of overhead costs within our operations, along with better results from our financial services operations, helped to drive a $32 million increase in pretax operating results. Our first quarter results reflect the benefit of initiatives launched in 2011 which are expected to deliver additional gains as we move through the remainder of 2012 and beyond."
For the quarter, the company reported a 15% increase in net signups of 4,991 homes, which were generated from 6% fewer communities. Prior-year net signups were 4,345 homes. The cancellation rate in the first quarter was 15%, down from 16% in the prior year.
PulteGroup’s contract backlog as of March 31 was 5,798 homes, with a value of $1.6 billion, compared with a prior-year contract backlog of 5,188 homes, valued at $1.4 billion.
Little change in Remodeling Market Index
The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) decreased one point to 47 from the upwardly revised 48 in the previous quarter.
In the first quarter, the RMI component measuring current market conditions dropped one point to 49, while the component measuring future indicators of remodeling business fell two points to 44.
“We are seeing that the demand for remodeling work has been pulled forward because of a mild winter,” said NAHB Remodelers Chairman George “Geep” Moore Jr., owner/president of Moore-Built Construction & Restoration in Elm Grove, La. “That is why many remodelers reported lower numbers for future activity.”
The three components measuring current market conditions moved in different directions: Major additions was even at 44, minor additions rose one point to 52, and maintenance and repair dropped four points to 51. Two of the four components measuring future market indicators decreased: Backlog of remodeling jobs dropped four points to 43, and appointments for proposals fell five points to 45. Calls for bids rose one point to 47, and amount of work committed for the next three months remained even at 42.
Regionally, remodeling market conditions in the West increased three points to 47, while the other three regions declined: the Northeast to 48 (from 55), the Midwest to 50 (from 52) and the South to 46 (from 49).
The overall RMI combines ratings of current remodeling activity with indicators of future activity. An RMI below 50 indicates that more remodelers report market activity is lower (compared to the prior quarter) than report it is higher.
Pulte surveys renters on homeownership
A majority of renters who have been considering a home purchase intend to do so within the next two years, according to a survey conducted by home builder PulteGroup.
Among the top reasons renters indicated they have increased their interest in buying a home include:
• They like being able to call themselves homeowners (49%);
• They view it as a good financial investment (44%); and
• They need more space for their family/kids (36%).
The survey also revealed that deterrents — both real and perceived — still persist, preventing some renters from taking the leap. The top three reasons indicated by current renters for not purchasing a home sooner include:
• Not enough money for down payment (54%);
• The belief that renting is cheaper than buying (28%); and
• Uncertainty with employment status (23%).
"Clearly the dream of homeownership is alive and well in America, yet we still have a ways to go to ensure more renters are able to take that important step toward buying their first home," said Deborah Meyer, senior VP PulteGroup. "Homeownership is more attainable than ever with historically low mortgage rates and competitive pricing, as well as affordable new homes designed for first-time home buyers coming into the market.
"We are seeing a renewed sense of optimism, especially from young professionals and young families visiting our communities nationwide," she continued. "In fact, in the first quarter of this year, sales and traffic for our Centex homes, which caters to the value-conscious and first-time buyer, saw a significant improvement over last year — yet another sign of an improving housing market.”