* Average selling prices rise 10 pct
* D.R. Horton shares rise 9 pct, PulteGroup 4 pct
* Horton's orders rise 57 pct from preceding quarter
(Adds details, background; updates shares)
By Sagarika Jaisinghani
April 24 D.R. Horton Inc and PulteGroup
Inc, the two biggest U.S. homebuilders, said a tight
supply of homes is helping them to raise prices, suggesting that
the market is regaining strength ahead of the crucial spring
Spring sales are to the real estate market what holiday
season sales are to retailers, and the industry is hoping home
buyers will return in force after a bleak winter and as mortgage
A dwindling number of existing homes for resale and a
scarcity of ready-to-build land is allowing U.S. homebuilders to
hike their prices.
D.R. Horton's shares rose as much as 9 percent on Thursday,
while PulteGroup's stock gained as much as 4 percent after the
companies reported a 10 percent rise in average selling price
for the first three months of the year.
With prices ranging between $100,000 and $1 million, D.R.
Horton primarily targets first-time buyers, the group considered
most sensitive to interest rates.
PulteGroup focuses on buyers trading up for the first time,
as well as first-time buyers.
Fixed 30-year mortgage rates averaged 4.49 percent last
week, the Mortgage Bankers Association said, down from a high of
4.80 in September - another indication that demand could pick up
after weak sales in March.
The run-up in prices, coupled with the unusually cold winter
and the higher rates, pushed sales of new U.S. single-family
homes in March to their lowest level in eight months, according
to Commerce Department data.
D.R. Horton's orders rose 9 percent in the quarter compared
with a year earlier and 57 percent from the preceding quarter.
PulteGroup's orders fell 6 percent from a year earlier, but
analysts said that did not reflect weakness in the wider housing
The company is slowing the pace of new-home building to
focus on raising prices and improving margins.
RBC Capital Markets analyst Robert Wettenhall said in a note
this week he expected PulteGroup's orders to fall 14 percent in
the latest quarter.
D.R. Horton's revenue from home sales, excluding land sales,
rose 22.7 percent to $1.68 billion. Net income rose to $131.0
million, or 38 cents per share, from $111.0 million, or 32 cents
per share, a year earlier.
PulteGroup's net income dropped to $74.8 million, or 19
cents per share, from $81.8 million, or 21 cents per share, in
the same quarter of 2013. Home sales revenue fell 1 percent to
D.R. Horton's shares, which had fallen about 4 percent this
year up to Wednesday, were up 7.6 percent at $22.98 in midday
trading on the New York Stock Exchange.
PulteGroup's shares, which had dropped 9 percent since the
start of the year, were up 2 percent at $18.94.
The Dow Jones U.S. Home Construction index had
fallen about 6 percent up to Wednesday's close.
(Reporting by Sagarika Jaisinghani in Bangalore; Editing by
Saumyadeb Chakrabarty and Ted Kerr)