PulteGroup reported weaker financial results for the fourth quarter, with both profit and revenue declining as homebuyer activity remained subdued amid an inflationary backdrop. The company pointed to incentive programs and affordability pressures that have dragged on margins even as interest rate moves offered limited relief.
Net income per share for the quarter ended December 31 was $2.56, down from $4.43 in the same period a year earlier. Analysts surveyed by LSEG had expected $2.82 per share. Total quarterly revenue was $4.61 billion, a 6% decrease from the prior year.
Management highlighted how the industry is attempting to stimulate sales through promotional measures. U.S. homebuilders are offering mortgage rate buydowns and building smaller, more affordable homes to attract buyers - steps that have reduced profitability. PulteGroup reported that home sale gross margin narrowed to 24.7%, from 27.5% a year ago.
The company also faces cost pressures tied to persistent inflation and tariffs on key construction raw material imposed by President Donald Trump. At the same time, some relief arrived in the form of the Federal Reserve's conservative interest rate cuts, which have helped improve affordability to a degree.
"While lower interest rates and more favorable pricing dynamics have worked to improve the overall affordability of new homes relative to a year ago, lagging consumer confidence continued to weigh on homebuyer demand in the quarter," said CEO Ryan Marshall.
Broader measures and economic signals also factored into the environment for buyers. The U.S. consumer sentiment index deteriorated in November and December, reflecting a moderation in spending after a third-quarter surge and increasing anxiety about jobs and the economic outlook.
In an effort to reduce housing costs, President Trump has requested that his representatives purchase $200 billion in mortgage bonds. Experts cited by PulteGroup said these bond purchases are unlikely to materially cut costs. They added that broader geopolitical anxieties associated with the administration may, over time, contribute to higher borrowing costs.
The combination of incentive-driven pricing, higher input costs and tepid consumer confidence contributed to PulteGroup's weaker fourth-quarter operating performance. The company faced a notable miss on earnings versus analysts' expectations while reporting a year-over-year revenue decline.
Context and financial highlights
- EPS for Q4 (ended December 31): $2.56 versus $4.43 a year earlier.
- Analyst estimate (LSEG): $2.82 per share.
- Total quarterly revenue: $4.61 billion, down 6% year-over-year.
- Home sale gross margin: 24.7%, down from 27.5% in the prior year.