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Due to a severe lack of available homes, demand for new construction surged, leading U.S. homebuilder PulteGroup to outperform Wall Street’s expectations for second-quarter profit on Tuesday.
Following an increase in house sales revenue during the period, the company’s shares gained approximately 1% in premarket trading.
Americans are clinging to their lower-than-average 30-year fixed mortgage rates, which have been around for months at about 7%, because they are taking advantage of the historically low cost of borrowing money.
Despite an increase in property prices, buyers have turned to newly constructed houses due to this “rate lock-in” that has limited sales of older homes in the US.
“While interest-rate movements can impact short-term homebuying demand, long-term market dynamics continue to benefit from a structural shortage of homes caused by years of underbuilding,” Ryan Marshall, CEO, said.
In the quarter ending June 30, PulteGroup delivered 8,097 homes, an increase of 8% year-over-year. The company typically offers a combination of affordable pre-constructed homes and more costly build-to-order homes tailored to buyer requirements.
In the second quarter, the Atlanta, Georgia-based company’s home sales revenue increased by 10% to $4.4 billion.
Homes sold for an average of $549,000 had a gross margin of 30%, up 30 basis points from the previous year and a 2% increase over the previous year.
In the second quarter, the firm made $3.77 per share after adjustments, which was higher than the average forecast of $3.27 per share among analysts, according to LSEG data.
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