PulteGroup SWOT and PESTLE Analysis

Strength

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Weakness

1. Jobs and Tax Act, 2017, reduced income tax advantages associated with homeownership, making it less attractive: The Tax Cuts and Jobs Act, promulgated in the U.S.A in 2017 by the Trump administration, primarily lowered the tax rates applicable to many businesses and individuals. Besides, it also introduced federal deductions for mortgage interest applicable to the first $750,000 of a new mortgage (as compared to $1 million ceiling under previous tax law) and eliminated the federal deductions for interest on certain home equity loans. Due to these changes and lowered deductions, individuals would find that the tax advantages associated with home ownership have declined significantly. The combination of these changes were projected to reduce home ownership affordability and demand, especially in regions with higher housing prices or higher state and local income taxes.

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Opportunity

1. focusing on sustainability by incorporating eco-friendly practices into home building: The development of land for new home construction impacts underlying ground cover which can impact the flow of storm water over the land. To ensure the protection of the environment, PulteGroup has developed an industry-leading National Storm Water Quality Program (“NSQP”). This NSQP helps in designing and building neighborhoods that can better manage the flow of rain water through the community, while helping to keep materials such as dirt, paint, concrete residue, oils or other waste from leaving the construction sites.

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Threats

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Political

1. The fiscal benefits arising from the policies passed by the Biden government will encourage homeowners to invest more helping PulteGroup expand its consumer base: Biden administration’s fiscal policy, combined with the vaccinations against COVID and the labor market gradually recovering back to normal, should encourage households with disposable incomes to purchase homes. For households that have remained employed over the past year, the added fiscal boost might mean that they can afford the down payment of their house in 2021 instead of the next fiscal i.e 2022. For workers who are unemployed, the extra unemployment benefits that are expected could mean lesser need to use up their savings until the job market goes back to pre-covid levels.

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Economic

1. The homebuilding industry is cyclical and more sales are expected towards the end of the year thus increasing company performance: The residential homebuilding industry is sensitive to changes in economic conditions and other factors, such as the level of employment, consumer confidence, consumer income, availability of financing, and interest rate levels. Adverse changes in any of these conditions generally, or in the markets of operation, could decrease demand and pricing for new homes in these areas which could adversely affect the prices of housing and lead to a significant decrease in the company’s revenues and earnings that could negatively affect their finances.

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Social

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Technological

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Legal

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Environmental

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