Two of the country’s biggest homebuilders reported earnings this morning before the opening bell, and shares of both are down more than 8% this morning.
D.R. Horton announced second quarter earnings of $0.42 per share – above analysts’ consensus estimate of $0.40 per share – but revenues came in light at $1.64 billion (versus expectations for $1.74 billion).
PulteGroup reported earnings of $0.36 per share – below the consensus estimate of $0.30 per share – and revenues of $1.28 billion, below expectations for $1.38 billion.
While sale prices were up, orders were 12% lower for PulteGroup. At D.R. Horton, however, orders were up 12%.
CEOs of both companies addressed the recent surge in mortgage rates in their respective earnings conference calls.
D.R. Horton CEO Donald Tomnitz said there was no question that interest rates affected sales, citing higher mortgage rates as a cause for increased cancellations.
Tomnitz said traffic count has slowed since the rise in rates, but that buyers should return as rates moderate.
However, he was “disappointed” that rates rose so “violently,” and asserted that homebuyers were “shocked and disturbed” by the spike in rates.
On the other hand, PulteGroup CEO Richard Dugas, Jr. said higher mortgage rates haven’t affected the market.
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