By Ben Fox
PulteGroup Inc.’s (NYSE:PHM) second-quarter earnings fell 14% as the home builder’s higher costs masked stronger closings and selling prices.
Pulte’s sales are considered a strong barometer for the sector because the company, one of the nation’s largest builders, constructs everything from entry-level homes to units for retirees nationwide. The company’s orders fell 12%, but closings were up 9% when compared with the year-earlier period.
Builders are benefiting from a low supply of existing-home inventory, as well as low mortgage rates that make buying more affordable than renting in many markets. However, sales of new homes remain well below historical levels.
For the latest quarter, PulteGroup reported earnings of $36.4 million, or nine cents a share, down from $42.4 million, or 11 cents a share, a year earlier. The latest period included 17 cents in special charges, stemming from a contractual dispute, debt repurchases and a previously announced corporate relocation.
Total revenue grew 20% to $1.28 billion.
Analysts polled by Thomson Reuters expected a per-share adjusted profit of 30 cents on revenue of $1.39 billion.
Home-building cost of revenue rose 15%.
Home sale gross margin rose to 18.8% from 15.1% a year ago. The average selling price rose 9% to $294,000.
Also, the company unveiled a new dividend of five cents a share and added $250 million to its share-buyback program, raising the company’s total authorization to $352 million.
Shares closed Wednesday at $18.45 and were inactive premarket. The stock is up 1.6% so far this year.