Homebuilder PulteGroup (PHM) said Tuesday that a chronic housing shortage in the United States presents an opportunity for the company to increase its market share.
“After more than a decade of underbuilding, our country is estimated to be experiencing a multi-million structural housing shortage,” Ryan Marshall, CEO of PulteGroup, 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 new, emerging consumers and active adults. »
The comments come as the company reported first-quarter results that beat Wall Street estimates, sending its stock up as much as 4%.
PHM reported earnings of $3.10 per share on revenue of $3.95 billion. Wall Street analysts expected EPS of $2.36 on revenue of $3.58 billion.
Homebuilders like Pulte have been able to manage the high interest rate environment by offering incentives to buyers. The average rate for a 30-year fixed loan exceeded 7% last week, according to Freddie Mac.
Marshall went on to say during the company’s first-quarter earnings conference call that housing prices would likely continue to rise due to limited inventory.
“Our company’s ability to offer targeted incentives, particularly mortgage rate buydowns, is a powerful tool that can help close the affordability gap,” he said.
He added that in the first quarter, “approximately 25% of our home buyers used our national interest rate program. In a world where the consensus is that interest rates will be higher for longer, our pricing incentives will likely become an even greater competitive advantage, particularly versus the existing home seller.
