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PHM Q3 Earnings Miss Estimates on Lower Closings & Margins
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Key Takeaways
PHM's Q3 earnings fell 14.5% to $2.53 per share, while revenues declined 9.8% to $3.97 billion.
PulteGroup's home closings fell 8.7%, while home sale gross margin contracted 140 bps to 24.8%.
PHM's net new orders declined 6.5%, but backlog rose 4.1% to 10,298 homes, valued at $6.44 billion.
PulteGroup, Inc. (PHM - Free Report) reported weaker-than-expected third-quarter 2026 results, with earnings and total revenues missing the Zacks Consensus Estimate and declining year over year. Earnings fell 14.5%, while revenues decreased 9.8% from the prior-year quarter.
The quarterly performance reflected lower home-closing volumes, softer average selling prices (ASP) and margin compression. Persistently challenging housing affordability, rising mortgage rates and inflation weighed on homebuyer demand. Net new orders declined year over year, although the company's backlog increased in both units and dollar value.
PHM stock plunged almost 6% following the earnings release.
Inside PHM's Q3 Earnings Headlines
Quarterly earnings were $2.53 per share, missing the Zacks Consensus Estimate of $2.63 by 3.8%. Earnings fell from $2.96 per share in the prior-year quarter.
Total revenues (Homebuilding & Financial Services) of $3.97 billion lagged the consensus mark of $4.13 billion by 3.9% and decreased 9.8% from $4.40 billion in the year-ago period.
Net income declined 18.8% year over year to $475.7 million from $585.8 million. Income before income taxes fell 18.6% to $625.2 million, reflecting weaker homebuilding profitability.
PulteGroup, Inc. Price, Consensus and EPS Surprise
Homebuilding segment revenues decreased 10.1% year over year to $3.87 billion. Home sale revenues declined 9.2% to $3.86 billion, primarily reflecting lower home-closing volumes and a modest reduction in average selling prices. Land sale and other revenues dropped to $7.8 million from $53.2 million.
The number of homes closed fell 8.7% year over year to 6,876 units. Deliveries declined across all six geographic regions, with the West and Northeast witnessing particularly pronounced contractions. The ASP of homes delivered slipped 0.5% to $561,000 from $564,000.
Homebuilding income before income taxes decreased 19.9% year over year to $579.6 million from $723.4 million. The decline reflected reduced sales volumes and continued pressure on home-sale margins.
PHM's New Orders Fall, Backlog Improves
Net new orders declined 6.5% year over year to 6,208 homes from 6,638. Orders increased in Florida but decreased across the remaining five geographic regions. The average community count rose 7% to 1,077, indicating that a larger selling footprint did not translate into higher overall orders.
The dollar value of net new orders fell 3.9% to $3.50 billion from $3.64 billion in the prior-year quarter.
PulteGroup ended the quarter with a backlog of 10,298 homes, up 4.1% year over year. Backlog units increased in the Northeast, Florida, Midwest and Texas, while the Southeast and West recorded declines. The value of homes in the backlog rose 3.4% to $6.44 billion, indicating a modest increase in the company's future home-delivery pipeline despite softer current-quarter demand.
PulteGroup's Margins Face Pressure
Home sale gross margin contracted 140 basis points (bps) year over year to 24.8% from 26.2%. The reported margin included $26 million of land impairments, representing approximately 70 bps of margin pressure.
Selling, general and administrative (SG&A) expenses declined to $397.2 million from $400.7 million. However, as a percentage of home sale revenues, SG&A expenses increased 90 bps to 10.3%, reflecting reduced operating leverage amid lower revenues.
Management emphasized its strategy of balancing home pricing and sales pace while aligning production with demand conditions. Move-up and active-adult buyers accounted for more than 60% of the company's business, supporting its focus on maintaining profitability amid housing-market challenges.
PHM's Financial Services Performance
Financial Services revenues increased 3.7% year over year to $107 million from $103.3 million. Segment income before income taxes improved 2.7% to $45.6 million from $44.4 million.
Mortgage origination volume declined 7.2% to 4,438 loans from 4,782, while origination principal fell 6.5% to $1.92 billion from $2.05 billion. The mortgage capture rate improved to 84.6% from 84.4%, reflecting a slightly higher proportion of eligible homebuyers using the company's mortgage services.
PulteGroup's Liquidity and Buybacks in Focus
PulteGroup ended the quarter with $1.41 billion in cash, cash equivalents and restricted cash, down from $2.01 billion at 2025-end. Notes payable totaled $1.81 billion, resulting in a debt-to-capital ratio of 12.1% and a net debt-to-capital ratio of 3%.
Operating cash flow for the first nine months of 2026 declined 42.1% year over year to $637 million, partly reflecting a $1.15 billion increase in inventories. During the third quarter, PHM repurchased 2.8 million shares for $350 million.
For the first nine months, repurchases totaled $1.03 billion, representing approximately 8.4 million shares. The company continued returning capital to shareholders while maintaining a relatively low leverage position.
KB Home (KBH - Free Report) reported third-quarter fiscal 2026 earnings of $1.05 per share, beating the Zacks Consensus Estimate of 88 cents by 19.3%. Earnings declined 34.8% from $1.61 per share in the year-ago quarter.
KBH’s total revenues of $1.30 billion surpassed the consensus mark of $1.29 billion by 0.4% but dropped 20% year over year. Results reflected lower deliveries and continued pricing pressure, partly offset by progress in the company’s Built to Order model. BTO homes represented 74% of deliveries, supporting sequential improvement in housing gross margin.
Lennar Corporation (LEN - Free Report) reported weaker-than-expected third-quarter fiscal 2026 (ended Aug. 31) results. Adjusted earnings of $1.23 per share missed the Zacks Consensus Estimate of $1.29 by 4.7% and fell 38.5% from $2.00 per share a year ago.
Lennar’s total revenues of $8.05 billion missed the consensus estimate of $8.33 billion by 3.4% and declined 8.6% year over year. Lower deliveries and home prices weighed on results amid affordability pressure. Inventory turn stood at 2.4 times.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2026 results, with adjusted earnings per share and total revenues beating the Zacks Consensus Estimate and increasing year over year. URI’s adjusted earnings of $15.55 per share topped the Zacks Consensus Estimate of $13.83 by 12.4% and grew 32.9% year over year from $11.70 per share. URI’s total revenues rose 15.7% year over year to $4.89 billion and surpassed the consensus estimate of $4.69 billion by 4.3%.
United Rentals management raised its revenue outlook to $18-$18.2 billion from $17.5-$17.8 billion. Adjusted EBITDA is now projected at $8.3-$8.4 billion compared with $7.98-$8.13 billion previously.
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PHM Q3 Earnings Miss Estimates on Lower Closings & Margins
Key Takeaways
PulteGroup, Inc. (PHM - Free Report) reported weaker-than-expected third-quarter 2026 results, with earnings and total revenues missing the Zacks Consensus Estimate and declining year over year. Earnings fell 14.5%, while revenues decreased 9.8% from the prior-year quarter.
The quarterly performance reflected lower home-closing volumes, softer average selling prices (ASP) and margin compression. Persistently challenging housing affordability, rising mortgage rates and inflation weighed on homebuyer demand. Net new orders declined year over year, although the company's backlog increased in both units and dollar value.
PHM stock plunged almost 6% following the earnings release.
Inside PHM's Q3 Earnings Headlines
Quarterly earnings were $2.53 per share, missing the Zacks Consensus Estimate of $2.63 by 3.8%. Earnings fell from $2.96 per share in the prior-year quarter.
Total revenues (Homebuilding & Financial Services) of $3.97 billion lagged the consensus mark of $4.13 billion by 3.9% and decreased 9.8% from $4.40 billion in the year-ago period.
Net income declined 18.8% year over year to $475.7 million from $585.8 million. Income before income taxes fell 18.6% to $625.2 million, reflecting weaker homebuilding profitability.
PulteGroup, Inc. Price, Consensus and EPS Surprise
PulteGroup, Inc. price-consensus-eps-surprise-chart | PulteGroup, Inc. Quote
PulteGroup's Homebuilding Revenues Decline Y/Y
Homebuilding segment revenues decreased 10.1% year over year to $3.87 billion. Home sale revenues declined 9.2% to $3.86 billion, primarily reflecting lower home-closing volumes and a modest reduction in average selling prices. Land sale and other revenues dropped to $7.8 million from $53.2 million.
The number of homes closed fell 8.7% year over year to 6,876 units. Deliveries declined across all six geographic regions, with the West and Northeast witnessing particularly pronounced contractions. The ASP of homes delivered slipped 0.5% to $561,000 from $564,000.
Homebuilding income before income taxes decreased 19.9% year over year to $579.6 million from $723.4 million. The decline reflected reduced sales volumes and continued pressure on home-sale margins.
PHM's New Orders Fall, Backlog Improves
Net new orders declined 6.5% year over year to 6,208 homes from 6,638. Orders increased in Florida but decreased across the remaining five geographic regions. The average community count rose 7% to 1,077, indicating that a larger selling footprint did not translate into higher overall orders.
The dollar value of net new orders fell 3.9% to $3.50 billion from $3.64 billion in the prior-year quarter.
PulteGroup ended the quarter with a backlog of 10,298 homes, up 4.1% year over year. Backlog units increased in the Northeast, Florida, Midwest and Texas, while the Southeast and West recorded declines. The value of homes in the backlog rose 3.4% to $6.44 billion, indicating a modest increase in the company's future home-delivery pipeline despite softer current-quarter demand.
PulteGroup's Margins Face Pressure
Home sale gross margin contracted 140 basis points (bps) year over year to 24.8% from 26.2%. The reported margin included $26 million of land impairments, representing approximately 70 bps of margin pressure.
Selling, general and administrative (SG&A) expenses declined to $397.2 million from $400.7 million. However, as a percentage of home sale revenues, SG&A expenses increased 90 bps to 10.3%, reflecting reduced operating leverage amid lower revenues.
Management emphasized its strategy of balancing home pricing and sales pace while aligning production with demand conditions. Move-up and active-adult buyers accounted for more than 60% of the company's business, supporting its focus on maintaining profitability amid housing-market challenges.
PHM's Financial Services Performance
Financial Services revenues increased 3.7% year over year to $107 million from $103.3 million. Segment income before income taxes improved 2.7% to $45.6 million from $44.4 million.
Mortgage origination volume declined 7.2% to 4,438 loans from 4,782, while origination principal fell 6.5% to $1.92 billion from $2.05 billion. The mortgage capture rate improved to 84.6% from 84.4%, reflecting a slightly higher proportion of eligible homebuyers using the company's mortgage services.
PulteGroup's Liquidity and Buybacks in Focus
PulteGroup ended the quarter with $1.41 billion in cash, cash equivalents and restricted cash, down from $2.01 billion at 2025-end. Notes payable totaled $1.81 billion, resulting in a debt-to-capital ratio of 12.1% and a net debt-to-capital ratio of 3%.
Operating cash flow for the first nine months of 2026 declined 42.1% year over year to $637 million, partly reflecting a $1.15 billion increase in inventories. During the third quarter, PHM repurchased 2.8 million shares for $350 million.
For the first nine months, repurchases totaled $1.03 billion, representing approximately 8.4 million shares. The company continued returning capital to shareholders while maintaining a relatively low leverage position.
PHM’s Zacks Rank & A Few Construction Releases
PulteGroup currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KB Home (KBH - Free Report) reported third-quarter fiscal 2026 earnings of $1.05 per share, beating the Zacks Consensus Estimate of 88 cents by 19.3%. Earnings declined 34.8% from $1.61 per share in the year-ago quarter.
KBH’s total revenues of $1.30 billion surpassed the consensus mark of $1.29 billion by 0.4% but dropped 20% year over year. Results reflected lower deliveries and continued pricing pressure, partly offset by progress in the company’s Built to Order model. BTO homes represented 74% of deliveries, supporting sequential improvement in housing gross margin.
Lennar Corporation (LEN - Free Report) reported weaker-than-expected third-quarter fiscal 2026 (ended Aug. 31) results. Adjusted earnings of $1.23 per share missed the Zacks Consensus Estimate of $1.29 by 4.7% and fell 38.5% from $2.00 per share a year ago.
Lennar’s total revenues of $8.05 billion missed the consensus estimate of $8.33 billion by 3.4% and declined 8.6% year over year. Lower deliveries and home prices weighed on results amid affordability pressure. Inventory turn stood at 2.4 times.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2026 results, with adjusted earnings per share and total revenues beating the Zacks Consensus Estimate and increasing year over year. URI’s adjusted earnings of $15.55 per share topped the Zacks Consensus Estimate of $13.83 by 12.4% and grew 32.9% year over year from $11.70 per share. URI’s total revenues rose 15.7% year over year to $4.89 billion and surpassed the consensus estimate of $4.69 billion by 4.3%.
United Rentals management raised its revenue outlook to $18-$18.2 billion from $17.5-$17.8 billion. Adjusted EBITDA is now projected at $8.3-$8.4 billion compared with $7.98-$8.13 billion previously.