PulteGroup, Inc. is a homebuilder in the United States (‘U.S.’).
While the company’s subsidiaries engage primarily in the homebuilding business, the company also has financial services businesses, which include mortgage banking, title, and insurance agency operations, through Pulte Mortgage LLC (‘Pulte Mortgage’) and other subsidiaries.
Homebuilding Operations
Homebuilding, the company’s core business, involves the acquisition and development of land primarily for residential purposes within...
PulteGroup, Inc. is a homebuilder in the United States (‘U.S.’).
While the company’s subsidiaries engage primarily in the homebuilding business, the company also has financial services businesses, which include mortgage banking, title, and insurance agency operations, through Pulte Mortgage LLC (‘Pulte Mortgage’) and other subsidiaries.
Homebuilding Operations
Homebuilding, the company’s core business, involves the acquisition and development of land primarily for residential purposes within the U.S. and the construction of housing on such land. The company’s Homebuilding operations are geographically diverse within the U.S. During 2024, the company operated out of an average of 945 active communities in 46 markets across 25 states. The company offers a broad product line to meet the needs of homebuyers in its targeted markets. Through the company’s brands, which include Centex, Pulte Homes, Del Webb, DiVosta Homes, John Wieland Homes and Neighborhoods, and American West, the company offers a wide variety of home designs with varying levels of options and amenities to the company’s major customer groups: first-time, move-up, and active adult. During 2024, the company delivered closings totaling 31,219 homes. As of December 31, 2024, the company delivered over 850,000 homes.
The company predominantly sells single-family detached homes, which represented 83% of the company’s home closings in 2024. The remaining units consist of attached homes, such as townhomes, condominiums, and duplexes.
Land acquisition and Development
The company acquires land primarily for the construction of homes for sale. The company selects locations for the development of homebuilding communities after completing a feasibility study, which includes, among other things, soil tests, independent environmental studies and other engineering work, an evaluation of necessary zoning and other governmental entitlements, and extensive market research that enables the company to match the location with its product offering to meet the needs of consumers. The company typically acquires land with the intent to complete sales of housing units within 24 to 36 months from the date of opening a community, except in the case of certain Del Webb active adult developments and other large master-planned projects for which the completion of community build-out requires a longer time period. While the company’s overall supply of controlled land is in excess of the company’s short-term needs in certain of the company’s markets, some of the company’s controlled land consists of long-term positions that will not be converted to home sales in the near term. Accordingly, the company remains active in its pursuit of new land investment. The company also periodically sells select parcels of land to third parties for commercial or other development or if the company determines that such parcels no longer fit into the company’s strategic operating plans.
Land is generally purchased after it is zoned and developed, or is ready for development, for the company’s intended use. Where the company develops land, the company engages directly in many phases of the development process, including: land and site planning; obtaining environmental and other regulatory approvals; and constructing roads, sewers, water and drainage facilities, and community amenities, such as parks, pools, and clubhouses. The company uses its staff and the services of independent engineers and consultants for land development activities. Land development work is performed primarily by independent contractors, and when needed, local government authorities who construct roads and sewer and water systems in some areas. At December 31, 2024, the company controlled 234,589 lots, of which 102,176 were owned and 132,413 were under land option agreements.
Sales and Marketing
The company is dedicated to improving the quality and value of its homes through innovative architectural and community designs. Analyzing various qualitative and quantitative data obtained through extensive market research, the company stratifies its potential customers into well-defined homebuyer groups. Such stratification provides a method for understanding the business opportunities and risks across the full spectrum of consumer groups in each market. Once the needs of potential homebuyers are understood, the company links its home design and community development efforts to the specific lifestyle of each consumer group. Through the company’s understanding of each consumer group, the company seeks to provide homes that better meet the needs and wants of each homebuyer.
The company’s homes targeted to first-time homebuyers tend to be smaller with product offerings geared toward higher density and lower average selling prices relative to the local market. Move-up homebuyers tend to place more of a premium on location and amenities. These communities typically offer larger homes at higher price points. Through the company’s Del Webb brand, the company addresses the needs of active adults. Many of these active adult communities are age-restricted to homebuyers aged fifty-five and over and are highly amenitized, offering a variety of features, including athletic facilities, recreational centers, and educational classes, to facilitate the homebuyer maintaining an active lifestyle. In order to make the cost of these highly amenitized communities affordable to the individual homeowner, Del Webb communities tend to be larger than first-time or move-up homebuyer communities. During 2024, 40%, 38%, and 22% of the company’s home closings were to first-time, move-up, and active adult customers, respectively.
The company is an innovator in home design, and the company views its design capabilities as an integral aspect of the company’s marketing strategy. The company’s in-house architectural services teams, supplemented by outside consultants, follow a disciplined product development process to introduce new features and technologies based on customer-validated data. Following this disciplined process results in distinctive design features, both in exterior facades and in interior options and features. The company typically offers a variety of house floor plans and elevations in each community, including potential options and upgrades, such as different flooring, countertop, fixture, and appliance choices, and the company designs its base house and option packages to meet the needs of its customers as defined through rigorous market research. Energy efficiency represents an important source of value for new homes compared with existing homes and represents a key area of focus for the company’s home designs, including high efficiency heating, ventilation, and air conditioning systems and insulation, low-emissivity windows, solar power in certain geographies, and other energy-efficient features.
The company markets its homes to prospective homebuyers through internet listings and link placements, social media, mobile applications, media advertising, illustrated brochures, and other advertising displays. The company has made significant enhancements in its tools and business practices to adapt the company’s selling efforts to today's tech-enabled customers. This includes the company’s websites (www.pulte.com, www.centex.com, www.delwebb.com, www.divosta.com, www.jwhomes.com, and www.americanwesthomes.com), which provide tools to help users find a home that meets their needs, investigate financing alternatives, maintain a home, learn more about the company, and communicate directly with it.
The company’s sales teams primarily consist of commissioned employees, and the majority of the company’s home closings also involve independent third party sales brokers. The company’s sales consultants are responsible for guiding the customer through the sales process, including selecting the community, house floor plan, and options that meet the customer's needs. The company is committed to industry-leading customer service through a variety of quality initiatives, including the company’s customer care program, which seeks to ensure that homebuyers are engaged and satisfied at every stage of the process. Fully furnished and landscaped model homes physically located in the company’s communities, which leverage the expertise of its interior designers, are generally used to showcase the company’s homes and their distinctive design features. The company has also introduced virtual reality walkthroughs of the company’s house floor plans in certain communities to provide prospective homebuyers with a more cost-effective means to provide a realistic vision of the company’s homes.
Many of the company’s homes are sold on a built-to-order basis where the company do not begin construction of the home until the company has a signed contract with a customer. However, the company also builds speculative homes in most of its communities, which allow the company to compete more effectively with existing homes available in the market, especially for homebuyers that require a home within a short time frame. The company determines its speculative home strategy for each community based on local market factors and maintain a level of speculative home inventory based on the company’s current and planned sales pace and construction cadence for the community.
The company’s sales contracts with customers generally require payment of a deposit at the time of contract signing and sometimes additional deposits upon selection of certain options or upgrade features for their homes. The company’s sales contracts also typically include a financing contingency that provides customers with the right to cancel if they cannot obtain mortgage financing at specified interest rates within a specified period. The company’s contracts may also include other contingencies, such as the sale of an existing home.
Construction
The construction of the company’s homes is conducted under the supervision of its on-site construction field managers. Substantially all of the company’s construction work is performed by independent subcontractors under contracts that establish a specific scope of work at an agreed-upon price. Using a selective process, the company has aligned with premier subcontractors and suppliers to deliver quality throughout all aspects of the house construction process. In addition, the company’s construction field managers and customer care associates interact with the company’s homebuyers throughout the construction process and instruct homebuyers on post-closing home maintenance.
Continuous improvement in the company’s house construction process is a key area of focus. The company seeks to build superior quality homes while maintaining efficient construction operations by using standard materials and components from a variety of sources and by following industry and company-specific construction practices. The company maintains high quality product offerings and production processes through the following programs:
Common management of house plans to deliver house designs that customers value the most and that can be built at the highest quality and at an efficient cost;
Value engineering the company’s house plans to optimize house designs in terms of material content and ease of construction while still providing a clear value to the customer;
Utilizing the company’s proprietary construction standards and practices, training of the company’s field leadership and construction personnel, communication with the company’s suppliers, and auditing the company’s compliance through the use of both internal and third party construction experts; and
Working with the company’s suppliers using a data driven, collaborative method to reduce construction costs.
Seasonality
The company generally experiences increases in revenues and cash flow from operations during the fourth quarter (year ended December 2024) based on the timing of home closings. This seasonal activity increases the company’s working capital requirements in its third and fourth quarters to support the company’s home production and loan origination volumes.
Financial Services Operations
The company conducts its financial services business, which includes mortgage banking, title, and insurance agency operations, through Pulte Mortgage and other subsidiaries. Pulte Mortgage arranges financing through the origination of mortgage loans primarily for the benefit of the company’s homebuyers. The company is a lender approved by the Federal Housing Administration (‘FHA’) and Department of Veterans Affairs (‘VA’) and are a seller/servicer approved by Government National Mortgage Association (‘Ginnie Mae’), Federal National Mortgage Association (‘Fannie Mae’), Federal Home Loan Mortgage Corporation (‘Freddie Mac’), and other investors. In the company’s conventional mortgage lending activities, the company follows underwriting guidelines established by Fannie Mae, Freddie Mac, and private investors. The company’s customers’ use of its in-house mortgage and title operations provides the company with a competitive advantage by enabling more control over the quality of the overall home buying process for the company’s customers, while also helping the company aligns the timing of the house construction process with its customers’ financing needs.
Operating through a captive business model targeted to supporting the company’s Homebuilding operations, the business levels of the company’s Financial Services operations are highly correlated to Homebuilding. The company’s Homebuilding customers continue to account for substantially all of the company’s loan production. The company originated the mortgage loans for 63% of the homes the company closed in 2024. Other home closings are settled via either cash or third party lenders. Cash buyers represented 21% of home closings in 2024.
In originating mortgage loans, the company initially uses its own funds, including funds available pursuant to credit agreements with third parties, and subsequently sells such mortgage loans to third party investors in the secondary market. Substantially all of the loans the company originates are sold in the secondary market within a short period of time after origination, generally within 30 days. The company also sells the servicing rights for the loans the company originates through fixed-price servicing sales contracts to reduce the risks and costs inherent in servicing loans. This strategy results in owning the loans and related servicing rights for only a short period of time.
The company utilizes a centralized fulfillment center for its mortgage operations that performs underwriting, processing, and closing functions. Centralizing both the fulfillment and origination of the company’s loans improves the speed, efficiency, and quality of its mortgage operations, improving the company’s profitability and allowing the company to focus on providing attractive mortgage financing opportunities for the company’s customers.
In originating and servicing mortgage loans, the company is subject to the rules and regulations of the government-sponsored investors and other investors that purchase the loans the company originates, as well as to those of other government agencies that have oversight of the government-sponsored investors or consumer lending rules in the U.S. In addition to being affected by changes in these programs, the company’s mortgage banking business is also affected by many of the same factors that impact the company’s homebuilding business.
The company’s subsidiary title insurance companies serve as title insurance agents and underwriters in select markets by providing title insurance policies and examination and closing services to buyers of homes the company sells. Historically, the company has not experienced significant claims related to the company’s title operations.
The company’s insurance agency operations serve as an agency for home, auto, and other personal insurance policies in select markets to buyers of homes the company sells. All such insurance policies are placed with third party insurance carriers.
History
PulteGroup, Inc., a Michigan corporation, was founded in 1950. The company was incorporated in 2013.
