US housing market seeing ‘meaningful’ damage that’s ‘not normal,’ CEO of investment firm warns
Big builders need to 'step up their game,' Bill Pulte says
Big builders need to ‘step-up their game’: Bill Pulte
Pulte Capital CEO Bill Pulte discusses the housing and construction market as the U.S. 30-year fixed mortgage rate falls for the fourth week in a row at 6.1% on ‘Mornings with Maria.’
The U.S. housing market is in for a rough year, according to the CEO of one private equity investment firm.
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"In 23' it's going to be slow. I think we're going to have a tough row to hoe. I think that coming in the next year, you're really going to see the damage that's going on," Pulte Capital CEO Bill Pulte explained on "Mornings with Maria."
"We need to make sure that these management teams are completely focused on executing right now because, Maria, you get 40% reduction in orders. And the big builders, they need to step up their game right now," he continued.
The 2023 housing market will be slow, according to Bill Pulte. (STEFANI REYNOLDS/AFP via Getty Images / Getty Images)
The 30-year fixed mortgage rate dipped for the fourth week in a row to 6.19% this week from 6.23% last week. A year ago, the average rate was nearly half, at 3.54%.
Host Maria Bartiromo pointed out that the home-buying mortgage application rate is down 10%, and asked whether Pulte believes that the U.S. housing market is currently suffering from a recession.
"It's going to be a tough row to sow the rest of the year. And I think you heard that on the earnings call. I think you're going to see that coming into – even next year, frankly – Because, Maria, these orders are down," he stressed. "Pulte Group's orders, for example, are down 40% year-over-year. I mean, that's meaningful, Maria. So, you can call it a recession. You can call what you want, but 40% orders being down, that's not normal."
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The FOX Business host bolstered Pulte's claim, in turn citing the November Case-Shiller 20-city index that revealed home prices were down .08% in November, declining for a fifth month in a row. Bartiromo argued that the nature of this report would be an "encouragement" for consumers to "get in the market," but instead, many are getting mortgage rate "sticker shock."
"It is. But Maria, one of the things, and you should know this, that's really happening in the industry, which is why a lot of these builders and VR reported. For example, last night the third-biggest builder, they reported a great report as well," he explained.
During his appearance on "Mornings with Maria," Wednesday, Bill Pulte argued that U.S.'s big builders need to ‘step up their game’ in order to help relieve the brittle real estate market. (Photographer: Rebecca Noble/Bloomberg via Getty Images / Getty Images)
Pulte continued, pointing out that many builders are using cash to pay down the interest expense of consumers.
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"So effectively, you know, you showed that the rates were 6% plus maybe 7% in some cases. They're able to get these rates down to like 4% with what the builders are offering in terms of incentives," Pulte concluded.