PulteGroup

Housing

PulteGroup’s CEO: “…we raised prices in 2021 and actively restricted new home sales through lot releases or similar practices….we raised prices in effectively all our communities.” “Ryan Marshall — President and Chief Executive Officer: The reality is that these numbers could have been significantly higher, but COVID and other challenges impacted our availability of lots, labor and materials, which caused us to intentionally slow sales. As part of our response strategy to these resource constraints, we raised prices in 2021 and actively restricted new home sales through lot releases or similar practices. We continue to implement these actions in the fourth quarter as we raised prices in effectively all our communities. At the same time, we continue to restrict sales in more than half of our communities.” (PulteGroup Q4 2021 Earnings Call, 2/1/2022)

PulteGroup President: “The limited supply of new and existing homes allowed prices to increase by double digits last year…” “Ryan Marshall — President and Chief Executive Officer: In other words, we enter 2022 with tremendous momentum. While demand conditions are strong, the supply side of the equation has been extremely challenging, with no clear signs as to when things will get better. The limited supply of new and existing homes allowed prices to increase by double digits last year, but labor shortages and significant disruptions in the supply chain are limiting production and extending build cycles. Our suppliers and partners are working hard to provide needed resources, but key products that are under allocation must be ordered months in advance or are simply not available.” (PulteGroup Q4 2021 Earnings Call, 2/1/2022)

PulteGroup’s CFO said his company saw a 10% in the average sales price for its homes. “Bob O’Shaughnessy — Executive Vice President and Chief Financial Officer: Home sale revenues in the fourth quarter increased 38% over last year to $4.2 billion. Higher revenues for the period were driven by a 26% increase in closings to 8,611 homes, along with a 10% increase in average sales price to $490,000. The higher ASP in the quarter reflects double-digit pricing gains from all buyer groups, while closings came in slightly above guidance, thanks to the tremendous effort on the part of our homebuilding and financial services teams. Consistent with comments made throughout 2021, favorable supply and demand dynamics for housing supported the strong price appreciation we experienced across all markets and from all buyer groups.” (PulteGroup Q4 2021 Earnings Call, 2/1/2022)

PulteGroup CFO: “If the supply of labor and materials does not allow for increased production, we’ll continue to emphasize price over pace, restrict sales as needed as we focus on driving the best returns within each community.”“Bob O’Shaughnessy — Executive Vice President and Chief Financial Officer: If the favorable demand conditions allow us to sell in an even higher year-over-year growth rate, we’ll have to see if the supply of materials and labor will be equally supportive. Based on what occurred in 2021, we want to be confident we can deliver a high-quality and complete home at closing. If the supply of labor and materials does not allow for increased production, we’ll continue to emphasize price over pace, restrict sales as needed as we focus on driving the best returns within each community. As we move through 2022, we are well positioned to meet buyer demand, given our expectations for sequential increases in our community count throughout the year.” (PulteGroup Q4 2021 Earnings Call, 2/1/2022)

PulteGroup’s CFO: “strong demand and pricing conditions in 2021 resulted in higher prices across all buyer groups, which has resulted in our average sales price in backlog increasing by 22% compared to last year.” “Bob O’Shaughnessy — Executive Vice President and Chief Financial Officer: For the coming four quarters, we project our average community count to be 790 in Q1, 815 in Q2, 840 in Q3 and 870 in Q4. Given the land investments we’ve made, we expect this trend to continue and see further community count growth in 2023. As mentioned, strong demand and pricing conditions in 2021 resulted in higher prices across all buyer groups, which has resulted in our average sales price in backlog increasing by 22% compared to last year. Given the price of homes in backlog and the mix of homes we anticipate closing, we expect our average sales price to be between $500,000 and $510,000 in the first quarter. Our average sales price should move higher as we move through the year and we currently expect our full year average sales price to be approximately $515,000. As always, the ultimate mix of deliveries can influence the average sales price we realized in any given quarter.” (PulteGroup Q4 2021 Earnings Call, 2/1/2022)

PulteGroup’s CEO said the company had “very regimented pricing discipline in the way that we break down what the competitive set is, both from a resale and a new environment, both what’s on the ground as well as what we see coming into the pipeline.““Ryan Marshall — President and Chief Executive Officer: Yeah. Carl, it is more than local. It’s probably hyper local. All of our pricing decisions are made on a community-by-community basis. But that’s a company philosophy. We’ve got very regimented pricing discipline in the way that we break down what the competitive set is, both from a resale and a new environment, both what’s on the ground as well as what we see coming into the pipeline over the next six to 12 months. So I think the tools, the methodology, the proprietary pricing algorithms that we have, we think it served us very well and we’ve gotten very good results from that. I think Carl, we always try to be prudent in what we do and never get too far over our skis. I think the industry has seen over the years, if you push things too far, the consumer will be pretty quick to tell you that you’ve gone too far and it will shut down. So in the face of potentially some more inventory coming online with some higher rates, we’re going to continue to run our playbook, but take into consideration all the data that’s available.” (PulteGroup Q4 2021 Earnings Call, 2/1/2022)