PulteGroup, NVR and Taylor Morrison report big Q3 profits but show some slowing

October 24, 2024 12:39 PM

The nation's largest home builders enjoyed healthy profits this summer as the market for existing properties remained ice cold.

Declining mortgage rates benefitted builders through September and they reported higher net income in the third quarter compared to their performance the same time last year. Three major companies however reported smaller new home orders between July and September, compared to spring activity.

Price tags for new homes also wavered on an annual basis. Many home builders with mortgage operations continue to offer buydowns and price cuts, but the sector's largest companies are pursuing differing strategies to attract borrowers.

"Overall market dynamics remain competitive," said Robert T. O'Shaughnessy, executive vice president and chief financial officer at Pulte Group, in an earnings call Tuesday. "As such, we expect incentives to remain elevated for the remainder of the year."

Taylor Morrison Home Corp. chairman and CEO Sheryl Palmer on Wednesday meanwhile said her company wrapped its lowest quarter of incentives in two years.

Builder stocks this week took a slight tumble following earnings reports. The S&P Homebuilders Select Industry Index also dipped slightly but remains lofty following a summer rally and a housing market still seriously inventory-starved.

The following are some earnings figures from the industry's largest companies. This list will be updated.

NVR Inc.

NVR rebounded this summer with $429.3 million in net income in the third quarter, a 7% improvement from the year ago period. That profit lagged the $433.2 million recorded in last year's third quarter, but NVR's diluted earnings per share in the latest period rose to $130.50.

The Virginia-based homebuilder counted 5,650 new home orders by the end of September, up annually but down by almost 1,000 builds from the second quarter. New home orders also averaged $450,700, another slight decrease both quarterly and annually.

NVR in the third quarter generated homebuilding revenue of $2.67 billion, a quarterly and annual rise. Its homebuilding segment income of $503.6 million was up 3% from the spring and flat compared to last fall.

The company reported its highest activity in the Mid-Atlantic, and is capturing mortgage business in 86% of its properties, down from 89% last year. The builder generated $1.65 billion in mortgage volume in the third quarter, for pretax income of $34.9 million in the mortgage banking segment. That was another mild decrease both from the year-ago period and from the second quarter, when NVR reported $45 million income off $1.53 billion in production.

"This decrease was primarily attributable to a decrease in secondary marketing gains on sales of loans," the company said Monday in an earnings press release.

PulteGroup

The Atlanta-based builder and lender reported $698 million profit in the third quarter, up from the $639 million in the third quarter of 2023. Diluted earnings per share were also up annually at $3.35, from $2.90 a year ago. The end-of-summer figure however was a stumble from $809.1 million in net income for the second quarter.

The 7,031 net new orders from customers was over 600 fewer than Pulte's second quarter total, and flat compared to last year. The dollar value of third quarter orders was $3.9 billion.

The average home sale price in the recent period was $548,000, unchanged from last September. Pulte's home and land sales revenue meanwhile ticked up to $4.3 billion, up from $3.9 billion in the third quarter of 2023 but down slightly from $4.49 billion in second quarter segment revenue.

The builder's financial services income, including mortgage lending operations, was up both quarterly and annually, at $113.8 million. It was $76.7 million in the last third quarter, and slightly smaller at $111.7 million three months earlier. Pulte reported its highest construction in Florida, the Southeast and Texas.

Taylor Morrison Home Corp.

Taylor Morrison ate up stronger demand for new homes over the summer, reporting $251 million in net income in the third quarter. That was a 25% quarterly jump and 47% growth from the $171 million profit the Scottsdale, Arizona-based builder posted in the third quarter last year.

"We have begun to see traffic recover in June and July, which translated into improving order volume throughout the third quarter, with activity ending on a high note in September," said Palmer in an earnings conference call.

The firm reported net revenue of $2.1 billion in the recent quarter and earnings per diluted share of $2.37, large quarterly and annual gains in accordance with the top-line income increase.

Taylor Morrison reported net sales orders up 9% annually to 2,830, but down from the second quarter's 3,111 total. Its average price of orders sold has also declined in the past year, from $611,000 last September to $598,000 this summer. Financial services division revenue meanwhile also rose in the stronger earnings, to $49.6 million in the third quarter from $40 million in the year ago period.

The company is anticipating 12,725 homes closed for the year, a guidance that's remained steady from the second quarter.