Homebuilder PulteGroup (PHM) said Tuesday that a chronic housing shortage in the US presents the company with an opportunity to grow its market share.
“After more than a decade of underbuilding, it is estimated that our country has a structural shortage of several million homes,” PulteGroup CEO Ryan Marshall said in a press release. “Our strong financial performance reflects both favorable demand conditions and our balanced operating model that allows us to more effectively meet the individual needs of first-time, move-up and active-adult consumers.”
The comments came as the company reported first quarter results that beat Wall Street estimates, sending its stock up as much as 4%.
PHM reported earnings of $3.10 per share on revenue of $3.95 billion. Wall Street analysts had expected EPS of $2.36 on revenue of $3.58 billion.
Homebuilders like Pulte have been able to manage the high interest rate environment by offering incentives to buyers. The average rate on a 30-year fixed loan topped 7% last week, according to Freddie Mac.
Marshall went on to say on the company’s first quarter earnings call that home prices will likely continue to rise due to limited inventory.
“Our company’s ability to offer targeted incentives, particularly mortgage rate buydowns, is a powerful tool that can help bridge the affordability gap,” he said.
He added that, in the first quarter, “approximately 25% of our homebuyers used our national rate program. In a world where the consensus is that interest rates will be higher for longer, our rate incentives likely become an even greater competitive advantage, especially relative to the existing home seller.”