After D.R. Horton kicked off the quarterly earnings season last week, six more public builders—PulteGroup, NVR, Meritage Homes, Taylor Morrison, Century Communities, and Tri Pointe Homes—reported quarterly results during the week of July 22.
Consistent with recent quarters, the public builders reported strong results, highlighted by increasing home sales revenue, increases in quarterly closings, and outperformance of Wall Street profit projections. While the companies noted demand slowdowns during the fiscal second quarter due to continued elevated mortgage rates, the outlooks shared by the six reporting builders remained positive for the duration of 2024.
PulteGroup
PulteGroup, the third largest company on the 2024 Builder 100 list, reported positive second quarter results, highlighted by closings and revenue growth. The company generated home sales revenue of $4.4 billion in the second quarter, a 10% increase from the prior-year period.
“As we sit here at the midpoint of 2024, I would say that it is shaping up to be a very good year for Pulte,” president and CEO Ryan Marshall said during the home builder’s second quarter earnings call. “Relative to our expectations coming into 2024, not only did we raise our initial closing guide by 1,000 homes, but we are clearly on a gross margin path well above our initial guide.”
PulteGroup delivered quarterly profits of $809 million, or $3.83 per share, up from profits of $720 million, or $3.21 per share, in the prior-year period. The results bested Wall Street projections by nearly $0.40 per share. Higher revenue in the period was driven by an 8% increase in closings to 8,097 homes and a 2% increase in average sales price to $549,000. Forty percent of second quarter closings were first-time buyers, 37% were move-up buyers, and 23% were active adult buyers.
Net new orders in the quarter fell to 7,649 in the quarter compared to 7,947 in the prior-year period. Pulte’s backlog was 12,982 homes with a value of $8.1 billion at the end of the quarter. The company started 8,100 homes in the quarter bringing total homes under construction to 17,250—of which 40% were spec homes. Cycle times in the quarter were 123 days, a pickup of about a week from the first quarter.
“We continue to build a more efficient and faster turning land pipeline. In the quarter, lots controlled via option increased to 53% of total lots,” Marshall said. “We are successfully building on our historic base of lots option directly with the land sellers by increasing our use of third-party bankers.”
NVR
NVR, the 4th largest company on the 2024 Builder 100 list, missed analyst earnings expectations in the company’s fiscal second quarter. The home builder generated quarterly profit of $400.9 million, or $120.69 per share, which was more than $0.50 per share below the conesus of Wall Street estimates.
In the quarter, new orders and average sales price for new orders for NVR both jumped 3% to 6,067 units and $458,800, respectively. NVR’s cancellation rate in the quarter increased to 13% from 11% in the year-prior period. The company reported 5,659 unit settlements in the quarter, an 11% year-over-year increase.
At quarter’s end, NVR had a backlog of 11,597 units with a value of $5.45 billion. The builder controlled 149,700 lots at the end of the quarter, compared to 130,400 lots at the end the second quarter of 2023.
Meritage Homes
Meritage Homes’ continued progress delivering “quick turning move-in ready homes” helped the home builder generate $1.7 billion in quarterly home closings revenue and its highest second quarter closings in company history.
“We achieved an average absorption pace of 4.5 per month this quarter while increasing community count sequentially from the first quarter, which generated our highest second quarter orders volume of 3,799 homes,” executive chairman Steven Hilton said. “With the resiliency in home buying demand stemming from favorable demographics and an under-built supply of homes in the market, we believe our focus on affordable move-in ready inventory will enable us to continue increasing our market share.”
The builder’s 10% year-over-year increase in home closing revenue was the result of 18% higher home closing volume—up to 4,118 from 3,490—partially offset by a 7% decrease in average sales price to $411,000 due to produce and geographic mix.
Meritage Homes, the fifth largest company on the 2024 Builder 100, generated net profit of $231.6 million, or $6.31 per share, a 24% increase from net profit of $186.8 million in the second quarter of 2023. The results outperformed the Zacks Consensus Estimate by more than $1.00 per share.
The builder spent $631.1 million in the second quarter on land acquisition and development, a significant increase from $408.5 million in the year-prior period. Meritage ended the quarter with 71,000 lots owned or controlled, adding over 8,700 new lots in the quarter which represent an estimated 63 future communities.
During the company’s quarterly earnings call, CEO Phillippe Lord highlighted how Meritage Homes is refining its strategy “by taking the home to a near completion stage before releasing it for sale” to approximate the just-in-time inventory structure of the retail market.
“This strategy evolution is built on three new core tenants: a 60-day closing guarantee, the concept of move-in ready homes, and a focus on deepening our Realtor relationships,” Lord said. “These tenants allow us to target the biggest piece of the potential home buyer pool by effectively competing with resale inventory, not just in today’s environment that favors builders but also when the resale market returns to historical averages.”
Taylor Morrison
“Solid” results in the fiscal second quarter for Taylor Morrison reaffirmed the builder’s full-year targets of 10% annual home closings growth and an annualized sales pace in the low-three range.
“Our performance and updated outlook once again reflect the overall strength and stability of our diversified consumer and geographic strategy,” chairman and CEO Sheryl Palmer said. “By meeting the needs of well-qualified home buyers with appropriate product offerings in prime community locations, we continue to benefit from healthy demand and pricing resiliency across our portfolio.”
In the second quarter, Taylor Morrison, the seventh largest builder on the 2024 Builder 100, generated profits of $199 million, or $1.86 per share, compared to $211 million, or $1.97 per share, in the second quarter of 2023. Palmer said the quarter started strong in April, but moderation in traffic occurred in May. Momentum began to recover in June and July.
Net sales orders increased 3% year over year to 3,111, driven by a monthly absorption pace of 3.0 homes per community. Home closings revenue fell 4% to $1.9 billion, driven by a 6% decline in the average closing price to $600,000. The decline was partially offset by a 2% increase in closings to 3,200 homes in the quarter. Resort lifestyle and move-up buyers accounted for 64$ of quarterly net sales, according to Palmer. Cancellations represented 9.4% of gross orders, down from 11.2% a year ago. At quarter’s end, Taylor Morrison had 6,256 homes in backlog with a sales value of $4.2 billion.
During the company’s earnings call, Palmer highlighted Taylor Morrison’s Canvas option package, which is included in all spec homes and “a growing share” of to-be-built offerings. Canvas has grown to represent 60% of closings, providing cycle time savings and “strong customer appeal,” Palmer said.
“Driven by these evolutions in our business, our option count has shrunk by nearly 60% since 2020 while our floor plan library has been streamlined by over 20%, improving our ability to leverage cost, scale our trade base, and deliver quality homes to our customers,” Palmer said. “For all these reasons, we believe our business is exceptionally well-positioned to take advantage of strong housing fundamentals in the years ahead to deliver strong results that exceed our historic performance as we strive to be within the top tier of our industry.”
Century Communities
Strong demand for affordable new-home supported positive results in the second quarter for Century Communities. The home builder’s quarterly earnings report was highlighted by 63% year-over-year growth in net profit, 20% growth in net new contracts, 17% growth in deliveries, and 24% growth in home sales revenues.
Century Communities reported net profit of $83.7 million, or $2.61 per share, which outpaced Wall Street projections for the home builder in the quarter. Home sales revenues reached $1.0 billion for Century Communities on 2,617 quarterly deliveries. The home builder reported an average sales price for deliveries of $388,800. Net new home contracts in the quarter increased to 2,780 and Century Communities ended the quarter with 1,753 homes in backlog.
“Given the strong performance we have experienced through the first half of the year, we have increased our full year 2024 guidance for home deliveries to be in the range of 10,700 to 11,300 homes and our home sales revenues to be in the range of $4.2 to $4.4 billion,” co-CEO and president Rob Francescon said.
Co-CEO and president Dale Francescon said “nearly 100%” of its homes were built on a spec basis in the quarter, allowing better cost control and meet “the healthy demand that we are seeing in our markets.” The builder’s direct construction costs remained flat on a sequential basis, supported by an expansion of the Century Communities trade and supply base across its footprint. The builder ended the second quarter with approximately 78,000 owned and controlled lots, a 35% year-over-year increase.
In addition to its financial results, Century Communities also announced the promotion of Scott Dixon to the role of chief financial officer in its earnings release. Dixon has served as the interim CFO since March after serving as assistant chief financial officer since May 2022.
Tri Pointe Homes
Tri Pointe Homes, the 18th largest company on the 2024 Builder 100 list, delivered “outstanding” second quarter results, highlighted by a 38% increase in home sales revenue to $1.1 billion and a 45% increase in deliveries to 1,700. The strong results drove a quarterly net profit of $118 million, or $1.25 per share, increases of 94% and 108%, respectively, compared to the prior-year period.
“The ongoing demand for new housing from Millennials and Gen Z, coupled with persistent supply constraints in the resale market, land availability, and labor resources, create a strong foundation for sustained growth in the new housing market,” CEO Doug Bauer said during the company’s earnings call. “These factors position our company favorably for future success, as we continue to address the increasing need for new homes in the face of limited existing inventory.”
Bauer said incentives on orders in the quarter were 3.7% of sales price, down slightly from 3.8% in the first quarter. First-time buyers represent 55% of Tri Pointe’s backlog while from a generational perspective 63% are millennials and 6% are Gen Z, Bauer said.
Tri Pointe ended the quarter with 2,692 homes in backlog representing a dollar value of $2.0 billion. The builder ended the quarter with 34,037 owned or controlled lots, up from 31,960 in the prior-year period.
Keep the conversation going—sign up to our newsletter for exclusive content and updates. Sign up for free.
