Pulte Homes Inc., the No. 2 U.S. home builder, said Wednesday that its quarterly profit fell 20% and that new orders dropped 29%, underscoring the slowdown in the U.S. housing market and prompting the company to cut its earnings forecast a second time since June.
Bloomfield Hills, Mich.-based Pulte reported fiscal second-quarter profit of $243 million, or 94 cents a share, down from $303.7 million, or $1.15, in the year-earlier quarter.
"The cancellation rates are just too high," said Keith Gangl, portfolio manager at Thrivent Investment Management.
"People are not spending money now," he said. "People have to sell their house first to buy a new house. They're not doing that now. It's more of a buyer's market now."
Last month Pulte cut its forecast and said second-quarter profit would be 85 cents to 95 cents a share, down from its previous outlook of $1 to $1.10. Analysts cut their forecasts after the warning to an average of 90 cents a share, down from $1.09, according to Reuters Estimates.
Revenue rose 3% to $3.4 billion during the quarter, in which the average sale price rose 8% to $335,000. But the number of homes sold fell 3% to 9,879.
"After several years of limited house inventory and robust demand, the supply of homes for sale continues to increase, while greater buyer uncertainty about purchasing a home at this time is being further impacted by their inability to sell existing homes and the effect higher prices and interest rates are having on overall affordability," Richard J. Dugas Jr., Pulte's chief executive, said in a statement.
In the second quarter, Pulte's orders fell to 9,455 homes, valued at $3.1 billion, down 29% from the year-earlier quarter.
Pulte cut its forecast for the year to earnings of $4 to $4.30 a share, down from its previously lowered earnings of $4.70 to $5. Analysts had expected $4.46 a share, according to Reuters Estimates.
Most major home builders, including Toll Bros. Inc., D.R. Horton Inc., Centex Corp. and Ryland Group Inc., have reported lower earnings and falling orders and have cut their forecasts.
In after-hours trading, Pulte's shares fell to $29.85, down less than 1% from their close of $30.05, up 9 cents, in regular trading.