By Shaina Mishkin

Home builder shares dropped as buyers became more cautious this spring. Wall Street isn't counting on PulteGroup's earnings stopping the slide.

Analysts expect that the Atlanta-based home builder will report earnings of $2.43 a share from about $3.8 billion in revenue for its first quarter, according to FactSet consensus estimates. That would compare with $3.10 a share from about $3.9 billion in revenue for the same quarter in 2024.

PulteGroup will report its earnings before the market opens on Tuesday.

Builders' earnings reports so far have painted a picture of a more hesitant home-buyer. Consumers are increasingly concerned about job security, adding to challenges such as higher mortgage rates and more supply in places like Florida and Texas that were already weighing on builders. The iShares U.S. Home Construction exchange-traded fund is down 13% this year, while the S&P 500 has fallen 10%.

Given all that, it would be no surprise if PulteGroup's earnings and commentary from management show that buyers are more reluctant to pull the trigger. Other publicly traded builders such as D.R. Horton, Lennar, and KB Home have already warned that consumers are less eager to buy homes this year, often requiring incentives or discounts to persuade them to go ahead.

"It's increasingly clear that spring 2025 is just a bust for home builders," says Rick Palacios, Jr., director of research at real estate analysis firm John Burns Research and Consulting. Roughly three in five builders in April told the National Association of Home Builders that they offered incentives, while 29% cut prices.

Builders face a difficult choice in a weaker market for selling homes. Leaning on incentives to spur demand means pressure on margins, while those who refrain from such offers may see sales slow.

PulteGroup "could lean more into preserving margin in the current environment," Oppenheimer analyst Tyler Batory wrote in an April 16 report, noting that the builder could use its financial forecasts to reduce expectations for its sales.

As of Monday, the consensus call among analyst tracked by FactSet was that PulteGroup would report 8,232 new orders and 6,613 homes sold in its first quarter, with a 26.9% home-sale gross margin. That would compare with the 8,379 new orders, 7,095 closings, and 29.6% home-sale gross margin it reported for the same quarter last year.

"Though we still like the [long-term] prospects for the company, there is some risk that Street estimates need to move lower to catch up with reality on the ground, as well as the impact of recently enacted tariffs, " Batory wrote.

PulteGroup's conference call, which is scheduled for 8:30 Eastern time on Tuesday, will set the stage for reports from other home builders this week. The home building companies Taylor Morrison, Meritage, Century Communities, and Tri Pointe are all expected scheduled to release their results.

The National Association of Realtors is scheduled to release data on March sales of existing homes at 10 a.m. Eastern on Thursday.

Investors will be listening closely to commentary about the current quarter as the industry looks for signs of what is to come. "The most important question is going to be: 'how is April looking?'" says John Burns Research and Consulting's Palacios, noting that the research firm's recent survey of builders was weak. "I think the answer to that question is going to be: 'not all that great.'"

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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April 21, 2025 17:35 ET (21:35 GMT)

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