PulteGroup pulls its weight in providing homes for American families. The company became the top homebuilder in the US when it merged with rival Centex in 2009. The company, which targets a cross-section of homebuyers around the country, buys land to build single-family houses, duplexes, townhouses, and condominiums. Its Centex brand is marketed to entry-level buyers, while Pulte Homes are targeted towards customers looking to trade up. PulteGroup also builds Del Webb retiree communities, mostly in Sun Belt locales, for the growing number of buyers in the 55-plus age range. The company sells its homes in some 70 markets across 30 states. In 2011, its homes sold for an average price of $259,000.
That figure matches its 2010 average selling price, but marks a modest increase from its 2009 average of $258,000, the first increase since prices began falling in the financial crisis. (The company's average sales price was $337,000 in 2006.) However, in the still-turbulent housing market, the company's home closings slipped to 15,275, down from 17,095 the previous year. (Sales decreased across all regions except for Florida, which experienced a 3% increase in closings.) That led to a decline in revenues, as well: It earned some $4.1 billion versus $4.6 billion in 2010. As unemployment levels remain high and foreclosure activity continues to be a significant factor, the immediate outlook for PulteGroup remains cool.
Being a homebuilding giant affords the company large-scale efficiencies and access to capital, a distinct advantage over smaller, local builders. PulteGropu has steadily been steadily growing its net income since 2007, although it still reported a loss of $210 million in 2011. That year it cut some 18% of its workforce and streamlined some local divisions; it continues to seek ways to cut operating costs. Its strategy to keep afloat also includes selling land it no longer deems fit into its plans and offering more affordable options to entice homebuyers.
Pulte's stock-for-stock merger (valued at $3.1 billion) with Centex helped the builder strengthen its focus on first-time homebuyers -- a market that has some of the most promise for growth. The combination also gave Pulte access to the Centex Homes label and the Fox & Jacobs brand in Texas. The merger occurred during one of the worst economic downturns in history, when home construction fell to extremely low levels and many smaller builders went out of business. With its expertise in retirement housing, plus the Centex focus on new homebuyers, PulteGroup is somewhat well-positioned to weather the housing downturn and eventually return the company to profitability.
Within its competitive industry, PulteGroup has maintained a diverse land portfolio, controlling some 131,000 lots. It has traditionally pursued a fast-growth strategy, acquiring land and smaller competitors such as Pratt Building System and DiVosta Homes in Florida. However, in light of the recession, PulteGroup scaled back its land acquisitions and development practices (though the Centex acquisition added tracts in Texas and the Carolinas). Some planned developments have been delayed and construction has slowed.
PulteGroup provides home financing through its Pulte Mortgage subsidiary, originating loans for more than half of the homes it sells. Beginning in 2009, the company has suffered losses due a rise in loan defaults. The company also has units that provide title and closing services.
Founder William Pulte owns 11% of the company. He retired from the company and the board of directors in 2010. – less
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