Homebuilder PulteGroup’s Stock Gains as Jump in New Orders Overshadows Soft Q4 Sales

Shares of homebuilder PulteGroup (PHM) jumped in early trading Tuesday before paring some gains after the homebuilder reported a surge in orders for new homes, overshadowing its fourth-quarter revenue falling short of analysts’ expectations.

Pultegroup reported a profit of $711 million or $3.28 per share in the fourth quarter, down from $882 million or $3.85 per share in the prior-year quarter. The company sold 7,615 homes—fewer than expected—at an average price of $547,000, down from $561,000 a year ago.

Home sales took a hit in the fourth quarter when the average rate on a 30-year mortgage surged to nearly 8%, its highest level in two decades. High rates pushed many potential homebuyers to the sidelines and encouraged sellers to offer concessions.

But with mortgage rates moderating in the second half of the quarter, Pultegroup’s net new orders increased 57% to 6,214 homes valued at about $3.4 billion. The increase reflected a better selling environment and a decline in cancelations, which fell to 9% of backlog from 11% in the year-ago quarter. 

The company also said its Board authorized the company to repurchase an additional $1.5 billion of shares, bringing its share repurchase total to $1.8 billion.

PulteGroup shares were up 0.3% at $106.39 per share in early trading Tuesday. The stock has gained more than 104% in the past year, making it one of the best-performing stocks in the S&P 500 over that period.