Shares of United Homes Group, Inc. (UHG Quick QuoteUHG - Free Report) have lost 4.8% since the company reported its earnings for the quarter ended Sept. 30, 2025. The S&P 500 Index gained 0.6% over the same period. Over the past month, the stock lost 66.8% against the S&P 500’s 3.2% growth.

UHG’s Earnings Snapshot

In the third quarter of 2025, United Homes swung to a much deeper loss even as pricing held firm. Revenue fell 23.5% year over year to $90.8 million from $118.6 million, driven mainly by a 28.9% decline in home closings to 262 from 369 a year earlier. Net loss widened to $31.3 million, or $0.53 per diluted share, from a loss of $7.3 million, or $0.15 per diluted share, in third-quarter 2024, largely reflecting a $27.2 million non-cash loss from the change in fair value of derivative liabilities, up from $7.8 million a year ago.

Gross margin contracted to 17.7% from 18.9%, while adjusted gross margin slipped to 19.6% from 20.6%. Net new orders eased 4.9% to 324 from 341 a year earlier, but pricing improved — the average sales price of production-built homes rose about 8.1% to $346,000 from $320,000 in the prior-year period.

United Homes’ Other Key Business Metrics

Operational trends showed pressure on volumes but a still-growing platform and order book. For the first nine months of 2025, revenue declined 13.9% to $283.3 million from $328.9 million as home closings dropped 19.7% to 817 from 1,017, while net new orders fell 11.8% to 924 from 1,048.

The year-to-date average sales price increased approximately 4.8% to $347,000 from $331,000, reflecting mix and price discipline despite heavier incentives. Gross margin for the nine-month period held steady at 17.7%, though adjusted gross margin slipped to 20% from 20.7% on higher discounting.

Profitability on an adjusted basis weakened. Adjusted EBITDA for the quarter fell 57.5% to $3.8 million from $8.9 million, while adjusted EBITDA margin contracted to 4.2% from 7.6%. Year to date, adjusted EBITDA declined 41.8% to $13.9 million from $23.9 million, and margin moved down to 4.9% from 7.3%. Adjusted selling, general and administrative (SG&A) expenses represented 16.5% of revenues in the quarter and 15.9% year to date.

The company’s land position and balance sheet remain important supports. United Homes reported a lot pipeline of about 7,700 lots owned or controlled by the company or related parties and available liquidity of $83.1 million, including $25.6 million of cash and $57.5 million of unused committed capacity under its credit facility as of Sept. 30, 2025. Backlog stood at 264 homes valued at approximately $94.3 million, up 20% and 18%, respectively, from 220 homes and $79.9 million a year earlier, indicating a larger book of future deliveries despite near-term softness in closings.

Across its key markets, closings dropped broadly, led by a 45.6% decline in the Midlands region, 22.2% in the Raleigh region and 16% in the Upstate market. The Coastal region saw an 11.9% fall in closings, while Rosewood stood out with a 75% increase, albeit from a small base.

UHG’s Management Commentary and Market Backdrop

Management framed the quarter as a product of affordability challenges and a choppy housing backdrop across its southeastern markets. Chief Executive Officer Jack Micenko highlighted softer demand earlier in the period, partly tied to delays in new community openings, but pointed to sequential improvement, with September described as United Homes’ best order month year to date and traffic rising to roughly 350–400 weekly visits from about 200 in the first half.

Chief Financial Officer Keith Feldman underscored that gross margins were pressured by more aggressive discounting of inventory, which offset benefits from a product refresh and direct cost reductions. Management reiterated its focus on operational efficiencies, cost savings and a disciplined approach to pricing and incentives, while leveraging a land-light model to maintain a sizable controlled lot pipeline.

Factors Influencing United Homes’ Headline Numbers

The steep year-over-year decline in revenues and profitability reflects a combination of lower volumes, heavier incentives and sizable non-cash mark-to-market charges. Home closings fell across most markets, including a 45.6% drop in Midlands closings and a 16% decline in Upstate closings in the quarter, though Rosewood saw a 75% increase in closings and 87.5% growth in net new orders, highlighting some localized strength. Overall, net new orders were down only 4.9%, but the conversion to closings lagged, weighing on revenue.

Margins narrowed as United Homes increased discounting and incentives to move completed inventory in a more competitive environment, even as construction cost savings from a rebid initiative partially offset these pressures. The swing in reported net loss was amplified by the larger non-cash loss related to derivative liabilities tied to potential earn-out consideration and warrants, which fluctuate with UHG’s stock and warrant prices and do not involve cash outflows.

UHG’s Guidance and Outlook

United Homes did not provide formal quantitative guidance, but management commentary offered a qualitative view of the road ahead. The company emphasized that new community openings and a growing active community count — 58 communities as of early November compared with 46 at the start of the year — should support higher sales and closings over time. Executives also stressed the long-term demand drivers of new construction, favorable demographics and the aspiration for homeownership, while acknowledging that affordability constraints, elevated new and existing home inventory, and muted consumer confidence remain near-term headwinds.

United Homes’ Other Developments

Beyond the operating results, corporate governance developments were a major theme this quarter. United Homes concluded a review of strategic alternatives, including a potential sale or merger, with a special committee of independent directors unanimously determining that continuing as an independent public company is currently in shareholders’ best interests given the macroeconomic backdrop. Following that decision, one director resigned immediately and five others notified the company of their intention to resign no later than Nov. 14, 2025. Management is working with the Executive Chairman to identify replacement directors to maintain compliance with Nasdaq listing requirements. It is in active discussions with lenders, land banking partners and insurers to manage potential pressures on key relationships as the transition unfolds.