Robert T. O'Shaughnessy
Executive Vice President and Chief Financial Officer at PulteGroup
Thanks, Ryan, and good morning. As Ryan noted, the Company delivered exceptional operating and financial results in the quarter, which have us well positioned to realize outstanding financial performance throughout 2024.
In the first quarter, we reported home sale revenues of $3.8 billion, which represents an increase of 10% over the prior year's first quarter. Higher revenues in the period were driven by an 11% increase in closings to 7,095 homes, partially offset by a 1% decrease in average sales price to $538,000. The lower closing price compared with the first quarter of last year reflects a shift in the geographic mix of homes closed as we realized relatively higher closings from our Southeast and Florida markets, with more modest increases in our higher priced western markets.
Closings in the quarter came in above our guide as we had available spec inventory to meet the strong buyer demand we experienced in the period. As Ryan highlighted, by choosing not to chase volume in last year's fourth quarter, we had additional inventory in Q1 that we were able to sell and close with better margins due to the improving buyer demand activity in the quarter. Our spec production is predominantly within our first-time buyer communities, and so on a year-over-year basis, we realized increased closings from first-time buyers.
In the quarter, our closing mix included 41% first time, 36% move up and 23% active adult. In the first quarter of last year, the mix of closings consisted of 38% first time, 36% move up and 26% active adult.
Reflecting the favorable demand conditions we experienced in the first quarter, net new orders increased 14% over last year to 8,379 homes. In the quarter, we realized a year-over-year increase in gross orders and a reduction in cancellation rates. Cancellations as a percentage of starting backlog fell to 10.1%, down from 12.7% in the first quarter last year. Average community count for our first quarter was 931, which is an increase of 6% over the prior year and in line with our guidance for year-over-year community count growth of 3% to 5%.
The resulting absorption pace of approximately three homes per month for the quarter was above our historic average for the period, excluding the pandemic-impacted years of '21 and '22. I would also like to highlight that orders in the quarter were higher across all buyer groups, which is another sign of the overall strength of the market. More specifically, net new orders among first-time buyers increased 8%, move-up increased 22% and active adult increased 12%.
Consistent with earlier comments, the large increase in orders among move-up buyers was influenced by improving market conditions in the west, where our business mix is much more heavily weighted towards move up. Given this strong start to our spring selling season, our quarter-end backlog increased to 13,430 homes with a value of $8.2 billion.
We started with approximately 7,500 homes in the quarter and ended the period with a total of 17,250 homes under construction. Our production pipeline includes approximately 7,000 or 41% spec homes, of which 1,337 are completed. We are operating just above our target of one finished spec per community, but believe carrying a few more finished specs is the right strategy given buyers' preferences and the fact that we are still in the more active spring selling season.
Given the units we have under construction and their stage of production, we expect to close between 7,800 and 8,200 homes in the second quarter. With a strong start to the year in both orders and closings, we are raising our guide for full year closings to approximately 31,000 homes. This would represent an 8% increase over 2023, which is the higher end of our long-term goal of growing our closing volume between 5% and 10% annually.
Closings in the first quarter had an average sales price of $538,000, which was slightly below our guide for pricing of $540,000 to $550,000. Relative to our guide, pricing in the quarter was influenced by the geographic mix of closings, along with a higher volume of spec homes closed in the period. As we move through the remainder of the year, we expect the mix of homes closed in each quarter will result in ASPs consistent with our prior guide of $540,000 to $550,000.
For the first quarter, we reported a gross margin of 29.6%, which is an increase of 50 basis points over the first quarter of '23 and a sequential gain of 70 basis points from the fourth quarter of '23. At 29.6%, our first quarter gross margin was also notably higher than our guide. Beyond Ryan's comments that we were achieving high returns by actively managing both pace and price, mix had an impact on our reported Q1 margins.
Higher demand increased in the quarter -- as the quarter advanced, which allowed us to sell and close more homes in the period than forecast. On a relative basis, more of these closings occurred in our higher margin markets in the Southeast and Florida, resulting in a meaningful increase in reported gross margins for the quarter.
Based on Q1 signups and the composition of our backlog, we would expect the geographic mix of closings to be more balanced as we move through the remainder of the year. That being said, we're raising our gross margin guide for the remainder of '24. We had previously guided to quarterly gross margins of 28% to 28.5%, but we now expect gross margins in the second quarter to be approximately 29.2%.
Based on current backlog, we'd expect gross margins in the third and fourth quarters to be approximately 29%, but we still have homes to sell and close, so demand conditions over the coming months will impact the results we can ultimately report.
Beyond buyer demand and near-term pricing dynamics, the gross margin guide for the remainder of '24 also reflects expected changes in the geographic mix of homes we expect to close. Given recent signup trends, we anticipate closing more homes in our west region, which currently have a lower relative margin profile due to the fact that we adjusted pricing in these markets over the course of '23 to achieve appropriate sales paces.
Looking at our costs, reported SG&A in the first quarter was $358 million or 9.4% of home sale revenues. As noted in our press release, our reported SG&A for the period includes a $27 million pretax insurance benefit. SG&A in the first quarter of '23 was $337 million or 9.6% of home sale revenues. Consistent with our previous guide, we continue to expect SG&A expense for the full year to be in the range of 9.2% to 9.5% of home sale revenues. Based on normal seasonality, we expect to realize increased overhead leverage as we move through the remaining quarters of the year.
Our financial services operations reported pretax income of $41 million for the first quarter, which is an increase of almost 200% from last year's pretax income of $14 million. The increase in Q1 pretax income was driven by better market conditions across our financial services platform. Financial services also benefited from higher capture rates across all business lines, including an increase to 84%, up from 78% last year in our mortgage operations.
As noted in this morning's press release, in the first quarter, we completed the sale of a joint venture that resulted in a gain of $38 million. On our income statement, this gain was recorded in equity income from unconsolidated entities.
Our reported first quarter pretax income was a period record of $869 million, an increase of 24% over last year. Against that, we recorded tax expense of $206 million, which represents an effective tax rate of 23.7%. Our reported Q1 tax rate was impacted by energy tax credits and stock compensation deductions recorded in the period. For the balance of the year, we continue to expect our tax rate to be in the range of 24% to 24.5%.
In total, our reported Q1 net income was $663 million or $3.10 per share, compared with prior year reported net income of $533 million [Phonetic] or $2.35 per share. Earnings per share in our most recent quarter benefited from a 6% reduction in share count compared with the prior year as we continued to systematically repurchase our stock.
Moving past the income statement, we invested approximately $1.1 billion in land acquisition and development in the first quarter. Consistent with our recent land activity, 60% of our land spend in the quarter was for the development of our existing land assets. Our Q1 land spend keeps us on track with our plan to invest approximately $5 billion in land acquisition and development for the full year, of which we continue to expect about 60% will be for development, with the remainder for the acquisition of new land positions.
We ended the quarter with approximately 220,000 lots under control, of which 51% were held via option. The purchase of several large land positions in combinations with decisions not to move forward with a few option transactions during the quarter lowered our lot option percentage from the end of 2023. I would highlight, however, that 74% of the lots we have approved in this most recent quarter were under option. As our first quarter numbers indicate, we continue to work toward our multiyear goal of controlling 70% of our land pipeline via option.
Looking at our community count, we continue to expect average community count in 2024 to increase 3% to 5% in each quarter over the comparable prior year period. Along with investing in our business, we continue to return capital to shareholders. In the quarter, we repurchased 2.3 million common shares at a cost of $246 million for an average price of $106.73 per share. In the quarter, we also opportunistically purchased approximately $10 million of our outstanding bonds.
After allocating approximately $1.4 billion to investment and the return of funds to shareholders, we ended the first quarter with $1.8 billion of cash. Taking all of this into account, our quarter-end gross debt-to-capital ratio was 15.4%, while our net debt-to-capital ratio was only 1.7%.
Now let me turn the call back to Ryan for some final comments.
