A combination of strong market conditions and a move-in-ready spec home strategy helped Tri Pointe Homes deliver earnings and deliveries above its guidance for the second quarter.
“The healthy buyer demand we saw in the first part of the year continued a strong seasonal trend through the second quarter, resulting in a 41% increase in net new-home orders compared to the same prior-year period and an 18% increase sequentially from the first quarter of 2023,” Tri Pointe CEO Doug Bauer said. “We attribute these outstanding results to several underlying factors fueling today’s housing market, the foremost of which is persistent limited supply of overall housing that falls short of current demand.”
During the second quarter, Tri Pointe delivered home sales revenue of $819 million and profits per share of $0.60, well above analyst expectations for the quarter. New-home deliveries in the quarter were 1,173 homes, compared with 1,485 homes in the prior-year period, for an average sales price of $698,000.
The cancellation rate in the second quarter for Tri Pointe was 8%, compared with 16% in the second quarter of 2022. Backlog units at quarter-end decreased 28% year over year to 2,765 homes. The dollar value of backlog at the quarter-end was $1.9 billion, a 36% decrease on a year-over-year basis.
“Demand for the quarter was broad-based across our geographic footprint with an absorption rate of 4.5 homes per community per month,” Tri Pointe president and chief operating officer Tom Mitchell said. “In addition, we raised net pricing at 73% of our selling communities during the quarter, while expanding our ending community count by 18%. As the home building industry gains momentum, driven by favorable market dynamics and demographic factors, we remain committed to enhancing operational efficiencies, fostering our company culture, and continuously innovating our product offerings to career to the evolving lifestyles of today’s discerning consumers.”
Bauer said Tri Pointe's focus on reducing cost and cycle times has resulted in a 9% reduction in cost since the fourth quarter of 2022 and a reduction of cycle times to an average of six to seven months. The company has approximately 33,000 lots owned or controlled and 3,131 homes under construction.
“As we enter the second half of 2023, we believe that our industry’s share of the housing market will continue to increase and that the current supply/demand imbalance will continue into the foreseeable future,” Bauer said. “Through the rest of the year, we will continue to prioritize operational efficiency and cost management as supply chains continue to normalize.”