PulteGroup's new orders fell 12% in Q1 as higher mortgage rates pushed buyers to delay decisions. The spring selling season is falling short of expectations, and next month's new-home sales data will be the next test.
Alpha Score of 56 reflects moderate overall profile with moderate momentum, strong value, weak quality, moderate sentiment.
PulteGroup's spring selling season is losing steam. The homebuilder reported a 12% decline in net new orders for the first quarter, a sign that higher mortgage rates are cooling demand even in markets that have held up better than the rest of the country.
The company closed 7,259 homes in the quarter, down from 8,213 a year earlier. Revenue fell 8% to $3.8 billion. The average selling price slipped to $527,000 from $544,000, reflecting a shift toward lower-priced homes and more incentives. Gross margin narrowed to 28.2% from 29.8%, squeezed by higher land costs and the concessions PulteGroup is offering to move inventory.
CEO Ryan Marshall said buyers are “taking longer to make decisions” as they wrestle with monthly payments that have climbed roughly 30% since the Fed started raising rates. The 30-year fixed mortgage averaged 6.9% in the quarter, up from 6.5% a year ago.
Backlog fell 22% to 12,656 homes, giving a thinner cushion for the remainder of the year. The stock has held up better than the broader homebuilding sector, down about 4% this year versus the SPDR S&P Homebuilders ETF's 7% decline. That relative strength does not change the message from the order book: the spring season, typically the industry's strongest, is falling short of initial projections.
PulteGroup's land-light strategy – it owns roughly 40% of its lots – gives it flexibility to pull back starts if demand weakens further. That buffer may not matter much if mortgage rates stay above 6.5% through the summer. The next read on housing demand comes in late May with the April new-home sales report.
PulteGroup carries an Alpha Score of 56, ranking Moderate on the AlphaScala scale. More detail on the company's fundamentals is available on the PHM stock page.
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