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UPDATE 2-Pulte tops order estimates as home prices ease, mortgage rates fall

Sanjana Shivdas

(Adds details on mortgage rates, analyst quote, updates share movement)

April 23 (Reuters) - PulteGroup Inc topped analysts' estimates for quarterly profit and new orders on Tuesday, as home demand was spurred by lower mortgage rates and easing home prices, after the Federal Reserve suspended its campaign of monetary tightening.

Shares of the company rose 3.6 percent after announcing the first-quarter results, with quarterly orders of 6,463 units beating average analysts' estimates of 6,257 units.

Chief Executive Officer Ryan Marshall said that homebuyers have been steadily returning to the market after a period of slowing demand that began in the second half of 2018.

"We view the significant increase in consumer traffic into our communities as an important indicator of the overall health of the housing industry," Marshall said.

While lower borrowing costs as well as strengthening wage growth have improved affordability, land and labor shortages have made it difficult for builders to ramp up construction of relatively low-cost homes.

The company, which mainly sells single-family homes, sold 4,635 homes in the quarter ended March 31, showing a marginal growth of 0.2 percent or 9 units from a year earlier.

Pulte said the average price for sold homes rose merely 2 percent to $421,00, further evidence that home prices are not appreciating quickly. The average selling price rose 10 percent in the year-ago quarter.

Morningstar analyst Brian Bernard said the average selling price for new orders was up almost 1 percent, suggesting Pulte wasn't being overly aggressive on incentives and is managing price and pace for the best margins.

U.S. home sales fell more than expected in March, as rising demand stoked by declining mortgage rates and slowing house price inflation continued to be frustrated by a lack of properties, especially in the lower-priced segment of the market.

The 30-year fixed mortgage rate has dropped from a peak of about 4.94 percent in November to around 4.12 percent, according to data from mortgage finance firm Freddie Mac.

The company's net income fell 2.3 percent to $166.8 million, or 59 cents per share, in the quarter.

Total revenue rose 1.4 percent to $1.99 billion.

Analysts' on average had expected the homebuilder to post a profit of 47 cents per share on a revenue of $1.93 billion. (Reporting by Sanjana Shivdas in Bengaluru; Editing by James Emmanuel)