Yahoo Finance Major homebuilder says activity picking up again amid coronavirus but still had to reduce workforce
The PulteGroup (PHM) said Monday that weekly home orders have almost tripled since the end of March — but it wasn’t enough to save jobs.
The Atlanta-based homebuilder, which had 800 orders in the first week of March, received only 140 new home commissions for the last week in March. Orders rose to 400 for the week ending May 3, but the company said orders are still down 50% for April, compared to the same month the year prior — prompting layoffs and furloughs.
“As part of our first quarter earnings release, we reported that following a very strong start to the year, housing demand slowed materially beginning in mid-March as the country was impacted by the COVID-19 pandemic,” said PulteGroup President and CEO Ryan Marshall, in a press statement.
Competitor D.R. Horton (DHI), based in Arlington, Texas, reported a similar uptick following losses. The company reported an increase in sales during the last two weeks of April, following four weeks of declines. The uptick meant an 11% net loss in April. This comes after 20% sales growth in the first quarter of the year, according to financial reports. Most home developers have not yet issued second-quarter earnings, but some, like Toll Brothers (TOL), have withdrawn second quarter and full fiscal-year guidance.
Across the country, new home sales dropped 15.4% from February to March, according to the U.S. Census Bureau. April sales data will be released April 26, but other leading indicators reveal that the housing market may rebound. New listings and pending sales losses have abated, and experts predict a robust recovery in the U.S. housing market.
PulteGroup declined to disclose the number of employees that had been laid off or furloughed, but indicated that among other cuts, staff reductions would save $65 million this year and $100 million in following years. The company will lose $10 million on severances and other related expenses.
“We have an outstanding team and employee-oriented culture which makes these actions extremely difficult, but these changes are necessary given the current operating environment,” said Marshall in a press statement. The board of directors and other company leaders will temporarily reduce their compensation, which will be redirected to the employee assistance fund, which now extends to furloughed employees.
The PulteGroup isn’t the only developer to lay off employees. The construction industry lost 13% of its workforce, or 975,000 jobs in April, according to the Associated General Contractors of America. Prior to the pandemic, the construction industry had already been dealing with a skilled labor shortage, having never recovered from the Great Recession. Further layoffs during the pandemic could exacerbate labor shortages, according to experts.
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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