Pulte Homes' mortgage capture rate falls as competition heats up

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PulteGroup's housing-finance unit recorded a year-to-year decline in its capture rate for the fourth quarter, as competition in the market intensified.

The 4-percentage-point drop in the mortgage unit's capture rate to 77% was "reflective of the competitive mortgage market," according to a company press release. Originations during the three months ending Dec. 31, 2018 fell to $1.29 billion from $1.35 billion during the same period in 2017.

"The company delivered strong financial results, but market conditions grew more challenging as 2018 progressed," Ryan Marshall, PulteGroup president and CEO, said in the release. Challenges cited included "general market anxiety" and affordability constraints that have softened housing demand.

"While continued strength in the economy, jobs and consumer confidence supports maintaining a positive, long-term view on housing demand, we maintain our disciplined approach to the business that we believe will help us to better navigate today's more volatile market condition," Marshall said.

PulteGroup more than doubled its net income for the quarter under generally accepted accounting principles, generating $238 million in earnings, up from $77 million the prior year.

When adjusted for tax-related charges and benefits, the company's net income of $314 million was up more than 24% year-over-year from $253 million in the fourth quarter of 2017.

Even though the company's $1.11 adjusted earnings per share beat the consensus estimate of $1.09 by 1.8%, the company's shares initially declined after its earnings were released because it posted the largest decline in net orders seen in five years, Zacks Equity Research noted in a report.

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