PulteGroup: Overvalued As Housing Shortage Slows And Home Prices Falter

Summary

PulteGroup's high valuation and profit margins are unsustainable due to low home affordability and a fading housing shortage, making it a potential short opportunity.
Despite strong recent performance, PulteGroup's backlog and new orders are declining, signaling reduced demand and increased risk exposure.
The Federal Reserve's interest rate cuts should not significantly lower mortgage rates, meaning home affordability is unlikely to improve without lower prices.
PulteGroup's aggressive investment in new projects amidst economic uncertainty could exacerbate losses if the economy enters a broader recession, though a 2008-repeat is unlikely for numerous reasons.

krblokhin

The home construction industry faces a strange mix of trends today; some support the market, while others are a growing concern. As tailwinds, the sector still has low home inventories following over a decade of weak construction activity in the 2010s. Homebuilders are

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