Jan 29 (Reuters) - Pultegroup on Thursday posted a drop in profit and revenue for the fourth quarter, as homebuyer demand struggles to pick up amid an inflationary environment.
U.S. homebuilders continue to offer incentives such as mortgage rate buydowns and smaller, more affordable homes to stimulate demand - which in turn has hurt their margins.
Home sale gross margin decreased to 24.7%, from 27.5% a year ago.
The sector is also navigating rising costs due to persistent inflation and President Donald
Trump's tariffs on key construction raw material, but saw some relief from the Federal Reserve's conservative interest rate cuts.
"While lower interest rates and more favorable pricing dynamics have worked to improve the overall affordability of new homes relative to a year ago, lagging consumer confidence continued to weigh on homebuyer demand in the quarter," said CEO Ryan Marshall.
The U.S. consumer sentiment index deteriorated in November and December, highlighting moderation in spending after it surged in the third quarter, as anxiety over jobs and the economic outlook grew.
In an effort to bring down housing costs President Trump has called on his representatives to buy $200 billion in mortgage bonds.
Experts say the bond-buying efforts are unlikely to significantly lower costs, but rather broader geopolitical anxieties driven by his administration look set to make borrowing more expensive over time.
Pultegroup earned $2.56 per share in the quarter ended December 31, a significant fall from last year's $4.43 per share during the same period.
Analysts estimated $2.82 per sshare, according to data compiled by LSEG.
Total quarterly revenue fell 6% from a year ago to $4.61 billion.
(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Shailesh Kuber)
