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Retail

PulteGroup sees boost to 2020 sales from low mortgage rates, flight to suburbs

(Reuters) - PulteGroup PHM.N on Thursday forecast strong full-year sales after reporting better-than-expected quarterly profit and orders as record-low mortgage rates and a shift towards suburban living amid the coronavirus crisis propped up interest in homebuying.

Shares of the U.S. homebuilder rose 9% in early trading.

The housing sector has seen a fast recovery from the initial round of lockdowns, with rock bottom interest rates helping drive sales higher.

Pulte said it saw a “remarkable rebound” in demand as orders, an indicator of future sales, jumped 50% in June, recovering sharply from a 53% plunge in April, led by strong demand among first-time home buyers.

“The recovery in demand reflects a number of factors, including low interest rates...and a desire among some buyers to exit more densely populated urban centers,” Chief Executive Officer Ryan Marshall said.

“Roughly half of our division presidents report that their business has experienced a modest increase in demand from urban buyers.”

A nationwide Harris poll has also shown that almost 40% of urban dwellers would now consider moving to less populated areas.

The recovery in demand at Pulte was led by an 8% rise in orders in Texas, the company’s second biggest market by home deliveries.

For the second-quarter, overall orders were down about 4% to 6,522 homes compared with a year earlier, but beat estimates of 5,633 homes.

Pulte, which withdrew its full-year outlook in April, said it expects to achieve full-year deliveries in a range of 23,500 and 24,000 homes, above analysts’ estimates of 23,125 deliveries, according to IBES data from Refinitiv.

Home sales at Pulte rose 6% to 5,937 homes in the quarter ended June 30.

On an adjusted basis, Pulte earned $1.15 per share, beating analysts’ estimate of 87 cents per share. Total revenue rose 4.2% to $2.59 billion.

Reporting by Ankit Ajmera in Bengaluru; Editing by Shinjini Ganguli

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