ALEX VEIGALOS ANGELES (AP) â¿¿ PulteGroup Inc., the nation's largest homebuilder, said Wednesday it returned to a quarterly profit for the first time in more than three years, as revenue surged amid a rush by Americans to complete their home purchase in time to qualify for federal tax credits. The builder's acquisition of rival Centex Corp. last year was key, bolstering its inventory of homes geared for first-time buyers, many of which seized on the government incentives to become homeowners. CEO Richard J. Dugas Jr., said buyer demand fell after the tax credit expired in April. It has since been stable, but well below normal levels. "At this point, we still feel that we can be profitable for the year, but given the pullback in demand, it's going to be a steeper hill than we thought," Dugas said. Shares slipped 5 cents to close at 8.38 Wednesday. The tax credits helped spur buyers back into the market last year and again this spring, boosting sales for homebuilders slogging through the worst real estate downturn in decades. But since the incentives expired on April 30, the number of people looking to buy has dropped, even with the availability of the lowest mortgage rates in decades. Sales of new U.S. homes jumped in June, but it was the second-weakest month on record. High unemployment, slow job growth, and tight credit, meanwhile, continue to keep many people from buying homes. "Beyond the immediacy of any tax credit impact, for the industry to experience meaningful and sustained rebound we need a stronger economy, job creation and better consumer confidence," Dugas said. "Right now the industry's biggest issue is a lack of buyers." PulteGroup's latest results were in line with other builders who also saw revenue jump as they completed deals on homes purchased before April 30. Buyers initially had until June 30 to complete their purchase and qualify for the tax credits, although lawmakers later extended that deadline to Sept. 30.
On Tuesday, rival homebuilder D.R. Horton Inc. said it reversed a year-ago loss, helped by the federal tax credit, but new home orders fell 3 percent in the absence of government incentives.PulteGroup, based in Bloomfield Hills, Mich., said net income for the second quarter ended June 30 totaled $76.3 million, or 20 cents per share. That compares with a loss of $189.5 million, or 74 cents a share, in the prior-year period. Analysts polled by Thomson Reuters, on average, expected the company to break even on a per-share basis on revenue of $1.24 billion. Results were helped by the company's acquisition of Centex, which closed in August 2009 and made the company the largest U.S. homebuilder based on number of homes sold. Prior-year results are not adjusted for the deal. The quarterly results also include about $45 million in land and mortgage charges, plus an $82 million benefit from income taxes. Revenue rose 92 percent to $1.31 billion from $678.6 million last year. Revenue benefited from the addition of Centex, which helped double closing volumes. PulteGroup's new home orders rose 25 percent from the prior year to 4,218. Factor in Centex's totals, however, and new orders for the combined company plunged 32 percent, in part, due to a 9 percent decline in open communities. Regionally, new orders held up best in the company's Gulf Coast, Southeast and Northeast markets, with gains in Texas, north and central Florida, the Carolinas and Tennessee leading to an increase in orders from May to June. Orders slowed primarily in the Midwest, Southwest and Western areas, with demand sinking most in Arizona and Nevada. Dugas said the company isn't going to try to lower prices across the board to try to chase buyers even as it's faced with weaker demand now that the tax credit incentive is gone.
"Our strategy is not to lower price from here on a widespread basis to try to drive volume," he said.