(Reuters) - PulteGroup Inc (NYSE:PHM) beat Wall Street estimates for second-quarter profit and revenue on Tuesday, as strong demand for affordable housing and tight resale inventory boosted new home sales.
Existing home-owners locked into a lower mortgage rates have been unwilling to re-sell their houses in a high interest rate environment, driving consumers to purchase new homes.
High demand and tight supply compared with pre-pandemic levels have led U.S. homebuilders' stocks rally, with the S&P Composite 1500 Homebuilding Sub Index up more than 50% so far this year.
In another tailwind for homebuilders, a shortage of labour and building supplies has also begun to ease, cutting construction time.
"While there remains an extremely limited supply of existing homes, we have an expanded community count and a much improved supply chain that has PulteGroup well positioned to meet buyer demand going forward," CEO Ryan Marshall said.
As buyers adjust to a high mortgage rate environment, the company has also begun to raise prices, boosting its quarter-on-quarter profit margins.
Homes closed in the quarter ended June rose 5% to 7,518 units with the average selling price rising 3% to $540,000 per house from last year.
PulteGroup reported a net profit of $3.21 per share, beating analysts' estimates of $2.51 per share, according to Refinitiv data.
Home sales revenue of $4.18 billion was 8% higher than last year and also topped analysts' estimates of $3.99 billion.
Shares of the Atlanta-based homebuilder rose 1.22% in premarket trading.