The third quarter earnings season for public builders underway, with five companies—PulteGroup, Taylor Morrison, NVR, Century Communities, and Tri Pointe Homes—reporting during the week of Oct. 21.
During earnings calls, builders discussed the macroeconomic impacts of lower interest rates in the quarter on demand trends and outlooks for the remainder of 2024. The impact of weather events, Fed rate cuts and uneven rate movement, and the upcoming election are factors that will likely impact operations in the final months of the year.
Despite the headwinds, each reporting builder for the week of Oct. 21 beat Wall Street projections, aided by large year-over-year increases in orders, deliveries, and revenues.
NVR
NVR, the fourth largest company on the 2024 BUILDER 100 list, generated a profit of $429.3 million, or $130.50 per share, in the fiscal third quarter. The builder reported revenues in the quarter of $2.73 billion, a 6% increase from the third quarter of 2023.
New orders for NVR in the quarter increased by 19% on a year-over-year basis to 5,650 units with an average sales price of $450,700. The builder’s cancellation rate increased marginally to 15% in the third quarter from 14% in the year-earlier period. Deliveries in the quarter increased 5% to 5,908 units with an average price of $453,200.
The company’s backlog at quarter’s end was 11,339 units representing a value of $5.32 billion, increases of 9% and 11% on a year-over-year basis, respectively. Home building revenues in the quarter increased by 7% to $2.68 billion in the quarter.
Century Communities
The strength in demand for affordable homes contributed to strong results in the third quarter for Century Communities, including 19% and 25% year-over-year growth in contracts and deliveries, respectively.
“Our average sales price was $394,000 in the quarter and remains among the lowest of the publicly traded home builders,” Dale Francescon, chairman and co-CEO, said on the company’s earnings call. “Given this price point and our focus on more affordable entry-level homes, we think Century is well-positioned to benefit from any future declines in mortgage rates as lower rates should allow a greater number of people to both qualify for and feel comfortable purchasing a new home.”
Century Communities generated $1.1 billion in home sales revenue in the third quarter while delivering a third quarter-record 2,834 homes. The company reported net new contracts of 2,563 homes in the quarter and ended the quarter with 1,580 homes in backlog.
The company started 3,141 homes in the third quarter, a 29% increase from the third quarter of 2023 and year-to-date started 9,824 homes, a 25% increase compared to 2023. Century Communities ended the third quarter with a community count of 305, a 21% increase on a year-over-year basis and the highest level in company history.
“Our total lot inventory of 80,121 increased by 17% on a year-over-year basis, with our controlled lots accounting for 55% of our total lots at the end of the third quarter,” Rob Francescon, co-CEO and president, said. “Texas, the Southeast, and Century Complete accounted for 73% of our total lot count, the highest percentage in our company’s history and reflective of our strategy to grow our presence in these attractive markets that are benefiting from relative affordability, strong employment, and population growth.”
Century Communities generated a profit of $83.0 million in the third quarter, or $2.59 per share.
Tri Pointe Homes
Tri Pointe Homes delivered “excellent” results in the fiscal third quarter, growing deliveries 32% and home sales revenue 35% in the period. Additionally, the builder’s profits per share figure increased 55% compared to the third quarter of 2023.
“Building on a strong third quarter, we remain focused on scaling efficiency across existing markets, while continuing to drive operational improvements that bolster long-term profitability and returns,” CEO Doug Bauer said.
Tri Pointe reported home sales revenue of $1.1 billion in the third quarter, driven by a significant improvement in deliveries to 1,619 homes. The builder generated third quarter profit of $11.8 million, or $1.18 per share, compared to profit of $75.4 million, or $0.76 per share, in the third quarter of 2023.
The company experienced seasonally strong demand in its Orange County, Inland Empire, Arizona, Washington, Houston, and Washington, D.C., divisions. Net new home orders in the period declined 17% year-over-year to 1,252.
Net home orders per average selling community ran at a pace of 2.8 per month, down from 3.3 per month in the third quarter of 2023. Incentives on orders in the quarter were 5.5% of price and approximately 65% of orders in the period were on spec homes. Tri Pointe’s cancellation rate held steady at 10% in the third quarter.
The builder ended the quarter with a backlog of 2,325 homes representing a value of $1.7 billion, declines of 24% and 18% compared to the third quarter of 2023.
Tri Pointe allocated $192 million to land and land development in the third quarter and ended the period with 33,000 total lots, of which 51% were owned. The company remains on pace to hit its community count targets of 150-160 by the end of 2025 and 170-180 by the end of 2026.
“Tri Pointe Homes is well-positioned to capitalize on the strong fundamentals driving the home building industry,” Tom Mitchell, president and chief operating officer, said. “The housing market fundamentals, including favorable demographics and a persistent supply-demand imbalance, create a supportive environment for sustained success.”