PulteGroup beat Wall Street expectations for third-quarter profit on Tuesday, as even at higher prices the demand for new constructions remained strong due to an acute shortage of existing homes.

U.S. existing home sales sharply declined as homeowners locked into cheap mortgages have been unwilling to put a tag of resale on their houses as they defer upgrades due to borrowing costs hitting the highest level in over two decades.

PulteGroup's net income came in at $2.92 per share, beating analysts' average estimate of $2.84 per share, as per LSEG data.

The Atlanta-based homebuilder said it increased the average sales price of homes closed by 2% in the quarter to $549,000.

Its revenue rose 3% from a year earlier to $4 billion in the quarter ended Sept. 30, largely in line with analysts' expectations.

"A variety of locations, price points, floor plans and incentive packages allows us to meet consumer needs while helping to address the affordability challenges caused by today's higher rates," said CEO Ryan Marshall.

(Reporting by Mehr Bedi and Ananta Agarwal in Bengaluru; Editing by Shweta Agarwal)