LOS ANGELES (AP) — Homebuilder PulteGroup Inc.'s net income soared in the third quarter, as the homebuilder benefited from a one-time, $2.1 billion tax gain.
The company also reported on Thursday that completed home sales increased 9 percent from a year earlier, but said orders for new homes fell 17 percent, reflecting an industry wide slowing in demand this summer.
"While consumers have recently slowed home purchases due to higher home prices, a rapid rise in mortgage rates, and political and economic uncertainty, we believe the slowdown will ultimately prove to be short lived within a sustained, multiyear housing recovery," Richard J. Dugas Jr., PulteGroup's chairman, president and chief executive, said in comments accompanying the earnings report.
Shares in the Bloomfield Hills, Mich., company jumped more than 7 percent in midday trading.
Mortgage interest rates began to tick up in May after Federal Reserve Chairman Ben Bernanke signaled the central bank might reduce its $85-billion-a-month in bond purchases. The purchases are intended to keep longer-term interest rates low, including mortgage rates.
The Fed held off last month, and since then mortgage rates have moved lower. At the same time, the federal budget impasse that led to a 16-day partial government shutdown this month added uncertainty to the mix, possibly discouraging some potential homebuyers.
Advancing home prices in many markets where the inventory of available homes for sale is already thin appears to have put off other homebuyers, especially as mortgage rates increased.
Despite the slowdown in new home orders, PulteGroup plans to step up land acquisition next year, boosting its annual land investment budget to $1.6 billion from a projected $1.4 billion this year.
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