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Earnings Preview: PulteGroup


LOS ANGELES (AP) â¿¿ PulteGroup Inc., the nation's largest homebuilder, reports first-quarter results before the stock market opens Wednesday.

WHAT TO WATCH FOR: Signs that home orders and completed sales rose during the quarter and any outlook from management on sales for the second half of the year.

Like other builders, PulteGroup has seen sales and orders pick up as affordable prices, low mortgage rates and two federal tax credits lured homebuyers into the market.

And sales of new homes surged 27 percent in March, the first jump in four months and the strongest month since last July. Homebuilders Beazer Homes USA Inc. and D.R. Horton Inc. have each reported an increase in net income and a bump in sales for their most-recently completed quarter.

So the trend bodes well that PulteGroup will also report a bump in orders for the three months ended in March.

The next big question is what happens next.

The tax credits that have spurred sales this spring expired at the end of April, and many industry experts question whether the fragile housing recovery will sputter as a result.

And the industry faces other challenges, including rising foreclosures, high unemployment and tight lending standards.

Regardless, PulteGroup, which is based in Bloomfield Hills, Mich., has positioned itself for the eventual recovery of the market.

Last month, the company officially changed its name from Pulte Homes as part of a new branding strategy in the wake its acquisition of rival Centex Corp. last fall.

The deal gave PulteGroup more communities with cheaply priced homes, as well as desirable land in Texas and the Carolinas.

WHY IT MATTERS: PulteGroup now has operations in 29 states and its Del Webb brand is the nation's largest builder of communities for adults age 55 and over.

PulteGroup and other homebuilders often begin construction on homes before they have a buyer, so their actions are a bellwether for the housing market.

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