Yahoo Finance US has 'structural shortage' of millions of homes, PulteGroup CEO says
Homebuilder PulteGroup (PHM) said Tuesday that a chronic housing shortage in the US presents the company with an opportunity to grow its market share.
“After more than a decade of underbuilding, it is estimated that our country has a structural shortage of several million homes,” PulteGroup CEO Ryan Marshall said in a press release. “Our strong financial performance reflects both favorable demand conditions and our balanced operating model that allows us to more effectively meet the individual needs of first-time, move-up, and active-adult consumers."
The comments came as the company reported first quarter results that beat Wall Street estimates, sending the stock up as much as 4%.
PulteGroup reported first quarter earnings of $3.10 per share on revenue of $3.95 billion. Wall Street analysts had expected earnings of $2.36 per share on revenue of $3.58 billion.
High interest rates have largely kept both homebuyers and sellers on the sidelines, and investors have scaled back bets the Federal Reserve will cut rates as quickly as initially projected at the start of the year.
The average rate on a 30-year fixed loan topped 7% last week, according to Freddie Mac.
But Marshall said on the company's first quarter earnings call that home prices will likely rise due to limited inventory.
"Our company's ability to offer targeted incentives, particularly mortgage rate buydowns, is a powerful tool that can help bridge the affordability gap,” he said.
Read more: Mortgage rates top 7% — is this a good time to buy a house?
He added that in the first quarter "approximately 25% of our homebuyers used our national rate program. In a world where the consensus is that interest rates will be higher for longer, our rate incentives likely become an even greater competitive advantage, especially relative to the existing home seller."
Marshall also noted that 60% of PulteGroup's business is move-up and active adult, "which tends to not be quite as rate-sensitive as the first-time buyer."
PulteGroup said home closings rose 11% to 7,095 in the first quarter from the year-earlier period. Average sales price fell 1% to $538,000.
The company expects full-year closings of about 31,000 homes, which would be an 8% increase from 2023.
Also read: What the NAR settlement means for home buyers and sellers
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.
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