Submitted by: Submitted by shellychen1989
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Category: Business and Industry
Date Submitted: 02/15/2013 09:56 AM
Construction Services Industry
Analysis
DR Horton
KB Home
Pulte Homes
1
INTRODUCTION
In 2007, the U.S. housing market faced continued deteriorating factors extending the
downward trends that began in 2006. Increased foreclosure activity and constraints on the
availability of certain mortgage financing products from the turmoil in the mortgage and credit
markets resulted in an oversupply of new and resale homes. In a response to weakened demand
for new homes, slower sales and higher cancellation rates, the homebuilding industry increased
price discounts and selling incentives to attract home buyers compared to recent years when the
industry experienced record growth. All these factors have resulted in poor performance in this
industry placing major homebuilders in one of the worst slumps in recent history.
COMPANY PROFILES (see Exhibit 1)
Pulte Homes, Inc. (PHM), a Michigan based company incorporated in 1956, is engaged
in the homebuilding and financial services businesses in 26 states. Its core business is
homebuilding, primarily under the brands Pulte, Del Webb and DiVosta. PHM offers homes for
sale in 636 communities with a variety of home designs at different prices points to various
customer segments. In 2007, PHM delivered 27,540 homes at a lower average selling price of
$322,000 compared to 41,487 homes delivered in 2006 at an average of $337,000. Pulte also has
a financial services operation, which consists principally of mortgage banking and title
operations for its home buyers.
KB Home (KBH), founded in 1957 as Kaufman and Broad, Inc, operates in13 states and
35 major markets, offering homes designed primarily for first time, first move-up and active
adult buyers, including attached and detached single-family homes, townhomes and
condominiums. In 2007, KBH delivered 23,743 homes at a lower average selling price of
$261,600 compared to the record 32,124 homes delivered in 2006 at an average of
2
$287,700. KBH’s...