Homebuilders Boost Profits Through Lending

Homebuilders are seeing their profits grow from an unexpected source — their lending units.

For example, PulteGroup Inc.’s mortgage revenue has soared 70 percent in the third quarter, nearly six times the revenue growth it saw from its home sales, Bloomberg reports. Similarly, Lennar Corp. also has seen its mortgage revenue soar, increasing by 60 percent and about double its sales revenue.

“Homebuilders are getting extra help right now from mortgages,” Jack Micenko, a homebuilding analyst at Susquehanna International Group in New York, told Bloomberg. “They’re over-earning in those areas because lending margins are so wide, but they can’t depend on that going forward.”

Builders like it when buyers choose to use their mortgage unit because it can be easier to coordinate completion dates with loan closings, Martin Connor, Toll Brothers’ Treasurer, said at a recent building conference.

“This mortgage company is important to us because it gets our buyers to show up with the right amount of money, on the right day, at the right place, to settle their homes,” Connor said.

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