Housing Bubble

Pulte Homes - record Q3 results, increase in home selling price

10 October 2005

Bloomfield Hills, MI, October 26, 2005 - Pulte Homes, Inc. (NYSE: PHM) announced today record financial results for its third quarter and nine months ended September 30, 2005. For the quarter, income from continuing operations increased 50% to a record $387.7 million, compared with $259.1 million last year. Third quarter earnings from continuing operations increased 48% to $1.47 per diluted share, compared with prior year earnings of $.99 per diluted share. Earnings per share for both periods have been adjusted for the Company's previously announced 2:1 stock split effective September 1, 2005.

Pulte Homes's consolidated revenues for the quarter totaled $3.8 billion, compared with $3 billion last year.

"Pulte's record third quarter results include a 48% increase in earnings per share, $4 billion in new orders and a backlog valued at $8 billion," said Richard J. Dugas, Jr., President and CEO of Pulte Homes.

"Beyond 2005, Pulte's unique strategy of serving all buyer segments: first time, first and second move up and active adult, should enable the company to further expand its share of the U.S. housing market." said Dugas

Third Quarter Results

Revenues from domestic homebuilding settlements for the quarter increased 32% to $3.7 billion, compared with $2.8 billion in the prior year. Higher revenues for the period resulted from a 21% increase in unit settlements to 11,747 homes, up from 9,669 settlements last year, combined with a 9% increase in average selling price to $317,000 per home. The higher average sales price reflects increases in selling price realized during the quarter and a favorable change in the mix of product delivered.

Third quarter domestic homebuilding pretax income increased 44% to $618 million, up from prior year pretax income of $429.6 million. Pretax income for the period benefited from higher revenues partially offset by an increase in material costs, combined with a 160 basis point decrease in selling, general & administrative expenses as a percentage of home settlement revenues reflecting the Company's continued efforts to drive greater overhead leverage.

Land sales during the quarter generated $25.1 million in revenues and $1.4 million in gross profit, compared with $69.1 million and $19.8 million, respectively, last year. Land sales are an important element of the Company's domestic homebuilding operations, but can fluctuate from quarter-to-quarter depending upon the timing of individual transactions.

Domestic net new home orders for the quarter were 12,062, an increase of 19% over prior year orders of 10,109 homes. Pulte's backlog as of September 30, 2005 was valued at $8 billion (23,666 homes), compared with $6.4 billion (20,400 homes) last year.

The Company's financial services operations reported third quarter pretax income of $19 million, an increase of 69% from the prior year. Higher loan originations for the quarter, up 24% to 10,985 loans, combined with a more favorable interest rate environment during the quarter drove the gains. For the quarter, Pulte Mortgage's capture rate was 88.8%, compared with 87.3% last year.

For the third quarter, Pulte's International operations reported pretax income of $1.4 million, compared with pretax income of $1.6 million for the same period last year. Pulte continues to evaluate different strategic alternatives with regard to its International operations as part of a broader initiative to drive enhanced financial results.

During the third quarter of 2005, the Company recorded a non-cash, after tax gain of $7.8 million in discontinued operations related to the favorable resolution of certain tax matters in connection with its thrift operations, which were discontinued in 1994.

Nine-Month Results

For the nine months ended September 30, 2005, Pulte Homes's income from continuing operations increased 57% to $910 million, compared with prior year net income of $579.8 million. Earnings from continuing operations for the first nine months were $3.46 per diluted share, an increase of 54% over prior year earnings of $2.24 per diluted share. Earnings per share for both periods have been adjusted for the Company's previously announced 2:1 stock split effective September 1, 2005. Consolidated revenues for the period were $9.7 billion, up from $7.5 billion for the first nine months of last year.

For the nine-month period, Pulte's financial services operations reported pretax income of $44.7 million, up from prior year pretax income of $29.8 million. Higher loan originations for the nine-month period, up 22% to 28,022 mortgages valued at $5.5 billion, better overhead leverage and a more favorable interest rate environment were the key drivers to the improved performance. Mortgage capture rate for the period increased to 88.5%, compared with 87.3% last year.

About Pulte Homes

Pulte Homes, Inc., (NYSE: PHM), based in Bloomfield Hills, Mich., is a FORTUNE 200 company with operations in 54 markets and 28 states. In 2004, the company delivered 38,612 homes in the U.S. and generated consolidated revenues of $11.7 billion. During its 55-year history, the company has constructed more than 408,000 homes.

In 2005, Pulte Homes received the most awards in the J.D. Power and Associates New Home-Builder Customer Satisfaction Study(sm), marking the sixth-straight year Pulte achieved this distinction among America's largest homebuilding companies. Pulte operations were highest-ranked in 16 markets and were among the top three in 22 of 27 markets in which it qualified.

Under its Del Webb brand, Pulte is the nation's largest builder of active adult communities for people age 55 and better. Its DiVosta operation is nationally recognized for a proprietary building system that has delivered more than 25,000 "Built Solid" homes in Florida since 1960. Pulte Mortgage LLC is a nationwide lender and offers Pulte customers a wide variety of loan products and superior customer service.