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Pulte Homes

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is counting on the ever-aging baby boomers to help fuel its growth, even as the overall national housing market slows down.

In an investor presentation Tuesday, Pulte said the majority of its growth in 2006 will come from its Del Webb business, which builds retirement homes for "active adults."

Del Webb closings are projected to increase by 4,500, or 31%, this year to 19,000. Traditional home-sale closings, meanwhile, are expected to increase by 870 to 2,870 homes in 2006, resulting in 32,000 to 34,000 closings. The midpoint of that guidance represents 6% growth.

AG Edwards analyst Greg Gieber, who rates Pulte a buy, drove home the importance of Del Webb in a research report in which he wrote, "thank heaven for retirees." He said the company actually underplayed just how insensitive the retirement segment is to swings in the business cycle.

"The average Dell Webb buyer is 62 years of age and at that age the average male has only 17 more years to live and not all of those years likely in an active state," Gieber wrote. "Del Webb buyers have very high personal discount rates and aren't likely to want to wait a couple of years for a 'better' housing or interest rate environment."

Of all the public builders, Pulte has the largest retirement business.


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have much smaller operations. Pulte closed on 12,000 "active adult" sales in 2004, more than twice its next competitor, Lennar, according to a chart in Pulte's presentation that was replicated from

Big Builder


"What Pulte is trying to do here is obviously to differentiate, but also to go to a segment of the home-buying public that is less price sensitive. Many have already paid off their mortgages," says Sam Lieber, portfolio manager of the

Alpine US Real Estate Equity Fund

(EUEYX), which owns Pulte and consists of about 50% homebuilders.

With the baby boomers graying, the market looks ripe for growth. And Del Webb will help Pulte separate itself from the pack over the next few years, as the overall housing market could go flat.

"When the fundamentals are strong, a rising tide lifts all ships -- that has happened," Lieber says. "We've had a great housing market. We're starting to see the need to be more selective." Pulte has a "brand that gives them a unique leg-up."

Pulte shares were up 5.3% to $40.80 in late Wednesday trading. In its investor presentation, the company said it reiterated its guidance for EPS of $6 to $6.25 this year and $6.60 to $7.20 in 2007. Analysts currently expect earnings of $6.09 a share for 2006 and $6.42 a share for 2007.