Article Excerpt:
TWST: Please tell us about Pulte Homes.Mr. Cregg: Pulte Homes is one of the largest homebuilders in the United States today. We operate in 27 states and 53 markets across the US. Our business strategy is unique in that we serve all four major segments of the market: first-time homebuyers, first move-up, second move-up, and active adult. Today, we are the largest active adult builder in the US through our Del Webb and DiVosta brands which are targeted toward serving the 55 and older buyers throughout the United States.
TWST: Would you give us a perspective on the market segment that you're
in, what you see particularly as the current events, as well as your
outlook?
Mr. Cregg: Our industry is sensitive to a number of macro factors
including demographics, interest rates, employment and job growth and
consumer confidence. There are a number of important changes that have
occurred over the last 12 months that have impacted the industry,
including the Federal Reserve continuing to raise interest rates. The
industry dynamics have changed, driven in part by the uncertainty in the
interest rate environment, but even more what we are experiencing is an
imbalance between supply and demand as the inventory of resale homes
continues to increase in many markets around the country. After a period
of accelerated demand in 2004 and 2005, driven in part by real estate
investors capitalizing on low interest rates, we are experiencing weaker
demand as buyers move to the sidelines of what they view as a riskier
home buying market. Once the uncertainty about interest rates passes, it
will then be about working our way through the excess supply of homes,
at which time we can get back to a better supply/demand balance. The
reality is that the economic backdrop is still positive. When you do
look at interest rates, they have been climbing because of rate
increases by the Federal Reserve, but the fact is that they're still
historically low on a 40- or 50-year basis. On the employment side, if
you look at the economy and the growth of GDP in the United States
today, we're still very solid relative to any other periods in the last
20 or 30 years. From an industry standpoint, the macro factors still
bode well for the continued strength of the industry. Long-term demand
in the United States looks to be about 2 million new homes needed
annually based on demographics and the overall population growth. So,
looking forward, we still feel very confident about the overall industry
and Pulte's ability to further increase its share of the US housing
market.
Tickers included in this excerpt: PHM
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