Homebuilders say quarterly profit rose

Kathleen M. Howley

Thursday, April 28, 2005 | 10:59 a.m.

Pulte Homes Inc., the No. 2 U.S. homebuilder by stock market value, said first-quarter earnings leaped 66 percent and smaller competitor Centex Corp. generated record profit for the ninth straight year as sales surged.

In Las Vegas, Pulte Homes, along its Del Web division, is the second largest builder, in terms of homes sold. Centex, which operates locally under the name Real Homes, is the No. 7 builder in the valley.

Pulte, based in Bloomfield Hills, Mich., said in a statement Wednesday that net income rose to $218.2 million, or $1.66 a share, from $131.6 million, or $1.02, a year earlier. Dallas- based Centex said quarterly earnings climbed 23 percent to $369.8 million, or $2.75 a share, from $300.1 million, or $2.30, and fiscal 2005 profit gained 22 percent to $1 billion.

Homebuilders are profiting as sales of new homes are headed toward their second-best year after 2004's all-time high. The Commerce Department reported this week that sales of new houses in March rose 12 percent from the previous month to a record annualized pace of 1.431 million, aided by low mortgage rates.

"These extraordinarily high levels we've seen probably are not sustainable, but we don't expect to see a big fall-off," David Seiders, chief economist of the National Association of Home Builders, said in a telephone interview.

Builders probably will sell 1.18 million houses in 2005, trailing only last year's record 1.2 million transactions, said Seiders, 59. On April 5, he had estimated there would be 1.151 million sales this year.

Pulte raised its 2005 earnings forecast to $9.35 to $9.85 a share, up from $9 to $9.50 previously. Analysts are expecting $9.16 a share, based on the average of 13 estimates in a Thomson Financial poll.

"Employment is going to remain strong and mortgage rates are expected to rise only modestly," Joseph Ofei, a Bank of America economist, said in a telephone interview. "Those factors are going to support the housing market this year."

The average U.S. rate for a 30-year fixed mortgage probably will be 6.1 percent this year, barely budging from the near-four- decade low of 5.8 percent in 2004, Seiders said.

Pulte's revenue increased 26 percent to $2.55 billion in the quarter. Home sales rose 14 percent to 8,019 units, as the average price of a house climbed 11 percent to $307,000. The backlog of homes ordered and not yet delivered advanced 13 percent to 19,964 units with a value of $6.5 billion, a record.

Centex's sales increased 25 percent to $3.99 billion in the three months through March. Home sales rose 5 percent to 10,126 units, and the backlog of homes increased 21 percent to 18,589. The average sales price rose 14 percent to $342,740.