(Revises first paragraph, adds CEO comments, background;
updates share price)
By Helen Chernikoff
NEW YORK (Reuters) - PulteGroup Inc bested
Wall Street's expectations for the second quarter and said it
would maintain prices on its homes despite pressure from
competitors focused on volume, sending its shares up as much as
Reporting its first profit since 2006, the No. 2 U.S.
homebuilder posted earnings of $76 million, or 20 cents per
share, compared with Wall Street estimates of a loss of a
penny, according to Thomson Reuters I/B/E/S.
But Pulte joined rivals in warning investors that the
housing industry has entered another period of soft demand in
the aftermath of the stimulus provided by federal homebuyer tax
"For the industry to experience meaningful and sustained
rebound we need a stronger economy, job creation and better
consumer confidence," Chief Executive Richard Dugas told
analysts on a conference call. "Right now the industry's
biggest issue is a lack of buyers."
Last year, Pulte posted a loss of $189.5 million, or 74
cents per share. The company had also recorded a net loss in
the first quarter.
This quarter's results included $82 million in benefits
related to income taxes but also $45 million in charges on land
The Bloomfield, Michigan-based company said demand had
stabilized at a low level after declining following the April
expiration of a U.S. tax credit for first-time homebuyers.
Revenue almost doubled to $1.31 billion as buyers and builders
alike rushed to seal deals before the June 30 deadline for
closings. The deadline for orders was April 30.
Orders rose 25 percent to 4,218 in the quarter, flat with
the first quarter.
A drop in interest rates boosted demand for mortgages for a
third straight week, the Mortgage Bankers Association said
But mortgage applications do not equal approvals, and
builders and industry analysts alike see a further weakening of
homebuyer demand. Credit Suisse analyst Dan Oppenheim sees a 13
percent decline in Pulte's orders in the third quarter.
Most of Pulte's rivals, such as No. 1 D.R. Horton Inc
and The Ryland Group Inc, reported a drop in
orders in their second quarters.
On Tuesday, Horton CEO Don Tomnitz was blunt in describing
a strategy that has them cutting prices as low as necessary to
sell homes, but Dugas said Pulte would not lower price in order
to drive volume.
"I'm not hearing anybody say that we are in need of
wholesale price adjustments," Dugas said. "Maybe a little bit
here and there, but actions that are likely to take a toll on
price are very specific and isolated to specific communities."
Pulte's shares were up 2.3 percent at $8.62 on the New York
Stock Exchange on Wednesday afternoon, off an earlier high at
(Reporting by Helen Chernikoff and Scott Malone, editing by
Dave Zimmerman and Matthew Lewis)