UPDATE 1-Homebuilder PulteGroup profit beats expectations on higher sales

(Reuters) – U.S. homebuilder PulteGroup Inc (PHM.N) reported better-than-expected third-quarter profit and revenue on Tuesday, as lower mortgage rates boosted demand.

The housing market, the most sensitive sector to interest rates, has perked up in recent months as the Federal Reserve’s monetary policy easing has pushed down mortgage rates from last year’s multi-year highs.

Shares of the company firmed 3% premarket as orders, an indicator of future revenue, rose 12.7% to 6,031 units in the quarter.

Pulte, which mainly sells single-family homes, said it sold 6,186 homes in the quarter, up from 6,031 a year ago, while the average home price fell marginally.

“Improving demand dynamics continued throughout the quarter, as lower interest rates and improved affordability had a positive impact on buyer interest,” Chief Executive Officer Ryan Marshall said in a statement.

The company’s net income fell to $273.1 million, or 99 cents per share, in the quarter ended Sept. 30, from $289.5 million, or $1.01 per share, a year earlier.

Total revenue rose 2.3% to $2.71 billion.

Analysts’ on average had expected the homebuilder to post a profit of 92 cents per share on a revenue of $2.57 billion, according to IBES data from Refinitiv.

Reporting by Sanjana Shivdas and Ashwini Raj in Bengaluru; Editing by Aditya Soni