* PulteGroup orders fall 12 percent to 4,885 homes
* D.R. Horton order growth slows to 12 percent
* Both builders expect sales pace to moderate
* PulteGroup shares fall 12 pct, D.R. Horton shares slide 9
By Mridhula Raghavan and Sagarika Jaisinghani
July 25 The top two U.S. homebuilders are
slowing their sales pace as they face issues ranging from a
shortage of land ready for development to a scarcity of building
supplies and higher mortgage rates.
D.R. Horton Inc said the number of homes booked in
the quarter ended June grew just 12 percent, compared with a 25
percent rise a year earlier.
PulteGroup Inc's, which recorded double-digit
percentage growth rates in orders throughout last year, posted a
12 percent fall in the second quarter.
The results dragged down the Dow Jones Home Construction
index, which fell 7 percent by Thursday afternoon.
U.S. homebuilders rode the housing recovery wave by selling
more houses at higher prices through 2012, but have come under
pressure from a recent spike in mortgage rates.
Interest rates have risen about 100 basis points since May
and have hit housing demand, causing a flurry among investors.
When an analyst remarked on a post-earnings conference call
that D.R. Horton's Chief Executive Donald Tomnitz did not sound
as enthusiastic as he did last quarter, the CEO said he was
disappointed by mortgage rates rising sharply following recent
remarks by Federal Reserve Chairman Ben Bernanke.
"It seems like one speech had a major impact on the industry
and our sales, which was really a ridiculous reaction by the
marketplace," Tomnitz said.
However, the company said it did not expect a lasting impact
from the higher interest rates.
For PulteGroup, the issues are more land related. The
company, faced with a lower lot supply than D.R. Horton, is
choosing to raise prices rather than to build homes faster.
"Don't look for us to go back to the days where Pulte was
grow grow grow at all costs, we want to be balanced," Chief
Executive Richard Dugas said on the company's post-earnings
Homebuilders in general have also been hurt by building
suppliers, hurt by tight credit and labor shortage, not being
able to provide materials fast enough to keep up with demand.
PulteGroup's net income fell to $36.4 million, or 9 cents
per share, from $42.4 million, or 11 cents per share, a year
PulteGroup's home sale revenue increased 19 percent to $1.22
billion, while D.R. Horton's home sale revenue jumped 46 percent
to $1.63 billion as both companies raised prices.
D.R. Horton's net income fell 81 percent to $146 million, or
42 cents per share, from $787.8 million, or $2.22 per share, a
year earlier when it recorded a tax benefit of $716.7 million.
D.R. Horton shares were down 9 percent at $19.33 in
afternoon trading on the New York Stock Exchange. PulteGroup
shares were down 12 percent at $16.22. Shares of other
homebuilders such as Lennar Corp, KB Home and
Toll Brothers Inc also fell.
(Editing by Joyjeet Das)