Buying a home in the US could get harder, PulteGroup (PHM) warned on its post-earnings conference call. The culprit? Tariffs, of course.
“We’re in the range of $5,000 on average, and it will impact every single price point and consumer group that we serve. There might be a few minor nuances, but it’s pretty broad across the spectrum,” the homebuilder’s CEO, Ryan Marshall, told investors and analysts on the company’s first quarter earnings call Tuesday morning.
That warning aside, PHM reported adjusted earnings per share of $2.57 for the first quarter, which surpassed the average analyst estimate of $2.43. PHM stock rose 6% in early trade on Tuesday following the results.
The news wasn’t all good, however. Despite the earnings beat, Pulte reported a 7.3% year-over-year decline in net sales orders for its fiscal first quarter ending March 31. Bottom line: 7,765 homes, falling short of analyst estimates for 8,166. Home closings also fell 7.2% year over year to 6,583, missing the analysts’ forecast of 6,595 homes.
The housing market continues to face increasing challenges, specifically trade tensions with Canada, Mexico, and China.
Read more: When will housing prices drop?
PHM is the first major homebuilder to highlight the potential cost impact of the new tariffs, estimating a roughly 1% increase in construction costs in the back half of the year.
The added expenses are expected to come from a range of materials, including plumbing fixtures, water heaters, porcelain, HVAC parts from China, tile flooring — which is subject to a global 10% tariff — and electrical components like circuit breakers and load centers.
“The world needs to be prepared for some disruptions as a result of things that are going on, tariff-induced,” Marshall added.
This projection echoes concerns raised by the National Association of Home Builders. (NAHB), which found that suppliers have raised prices by 6.3% on average in response to current, enacted, or anticipated tariffs. Those costs add an estimated $10,900 to the price of a new home, the NAHB calculated.
Still, tariffs are only one part of the equation.
As Marshall noted: “From high absolute selling prices of today’s homes to the resulting high monthly mortgage payments, consumers are struggling with the affordability challenges when it comes to purchasing a home. These headwinds have only been exacerbated recently by growing concerns about the potential for a slowing economy.”
In response, the company increased incentives by 8% during the first quarter. Despite the effort, new orders declined across various buyer segments — first-time buyer numbers are down 11%, move-up buyer stats dropped 4%, and active adult buyers fell by 5% year over year.
