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    PHM
    Earnings call· Jun 2026(Q2 FY26)

    PULTEGROUP INC/MI/ PHM

    Jul 22, 2026 Source

    Executive summary

    PulteGroup Q2 FY26 — Strong Order Growth and Margin Performance

    PulteGroup delivered strong Q2 FY26 results, driven by a strategic shift towards build-to-order homes and disciplined inventory management, leading to robust order growth and impressive gross margins. The company continues to navigate a variable demand environment influenced by macro factors, while maintaining its capital allocation strategy and investing in land for future growth.

    Highlights

    5

    • Net new orders increased by 6% year-over-year, with higher orders across all buyer groups.

    • Homebuilding gross margins reached 25% for the quarter, a 60 basis point sequential increase from Q1.

    • Finished spec inventory reduced to 1.3 homes per community, down from 1.9 homes in Q2 FY25.

    • Build-to-order sales increased to 45% of new orders, aligning with the strategic shift.

    • Q2 house costs were down 5% year-over-year to just under $75 per square foot.

    Concerns

    4

    • Home sale revenues decreased by 8% year-over-year to $3.8 billion due to fewer closings.

    • SG&A expense as a percentage of home sale revenues increased to 10.1% from 9.1% in Q2 FY25 due to fewer closings.

    • Consumer activity was impacted by global tensions, macroeconomic uncertainty, and interest rate movements.

    • West operations experienced softer demand, requiring aggressive competition for sales.

    Guidance & targets

    14
    CategoryTargetConfidence
    Closings
    7,000 to 7,400 homes
    high materiality
    High
    Closings
    28,500 to 29,000 homes
    high materiality
    High
    Community Count Growth
    up 3% to 5%
    medium materiality
    High
    Average Sales Price of Closings
    $550,000 to $560,000
    medium materiality
    High
    Average Sales Price of Closings
    $550,000 to $560,000
    medium materiality
    High
    Gross Margin
    24.5% to 25.0%
    high materiality
    High
    Gross Margin
    24.5% to 25.0%
    high materiality
    High
    House Costs
    down slightly from 2025
    medium materiality
    Medium
    SG&A Expense
    9.5% to 9.7% of home sale revenues
    medium materiality
    High
    Effective Tax Rate
    24.5%
    low materiality
    High
    Land Investment
    $5.4 billion
    high materiality
    High
    Operating Cash Flow Generation
    approximately $1 billion
    high materiality
    High
    Build-to-Order Mix
    approximately 60% BTO and 40% spec
    high materiality
    High
    Build-to-Order Mix Target Timeline
    sometime next year
    medium materiality
    Medium

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    First-time Buyer Orders
    Orders increased over Q2 FY25.
    Mix of total orders: 39% (Q2 FY26)Mix of total orders: 40% (Q2 FY25)
    		—5%——
    Move-up Buyer Orders
    Orders increased over Q2 FY25.
    Mix of total orders: 36% (Q2 FY26)Mix of total orders: 36% (Q2 FY25)
    		—4%——
    Active Adult Buyer Orders
    Orders increased over Q2 FY25, benefiting from new Explorer by Web communities in Tampa and Columbus.
    Mix of total orders: 25% (Q2 FY26)Mix of total orders: 24% (Q2 FY25)
    		—12%——
    First-time Buyer Closings
    Increased mix of closings compared to prior year.
    Mix of total closings: 41% (Q2 FY26)Mix of total closings: 39% (Q2 FY25)
    		————
    Move-up Buyer Closings
    Decreased mix of closings compared to prior year.
    Mix of total closings: 37% (Q2 FY26)Mix of total closings: 41% (Q2 FY25)
    		————
    Active Adult Buyer Closings
    Increased mix of closings compared to prior year.
    Mix of total closings: 22% (Q2 FY26)Mix of total closings: 20% (Q2 FY25)
    		————
    Florida Operations
    Strong demand continued, contributing to higher closings mix and improved gross margins.
    Net new orders growth: 19% (Q2 FY26 YoY)
    		————

    Operational metrics

    37
    Net new orders
    7,536up 6% YoY
    Q2 FY26

    Increased across all buyer groups.

    Value of net new orders
    $4.1Bup 5% YoY
    Q2 FY26
    Average community count
    1,074up 8% YoY
    Q2 FY26
    Absorption pace
    2.3down 1% YoY
    Q2 FY26
    Cancellation rate
    11%comparable to last year
    Q2 FY26
    Build-to-order mix of orders
    45%
    Q2 FY26
    Spec mix of orders
    55%
    Q2 FY26
    Build cycle time
    100
    Q2 FY26

    Or fewer in many markets.

    Home sale revenues growth
    -8%YoY
    Q2 FY26

    Reflects an 8% decrease in closings and a 3% decrease in average sales price.

    Closings
    6,997down 8% YoY
    Q2 FY26
    Average sales price of closings
    $544,000down 3% YoY
    Q2 FY26
    Backlog homes
    10,966
    Q2 FY26 end
    Backlog value
    $6.8B
    Q2 FY26 end
    Homes in production
    14,980
    Q2 FY26 end
    Spec homes in production
    6,638down 1,000 homes or 13% YoY
    Q2 FY26 end

    Successfully lowered total spec inventory.

    Finished spec homes
    1,400
    Q2 FY26 end
    Finished spec homes per community
    1.3down from 1.9 in Q2 FY25
    Q2 FY26 end
    Homebuilding gross margin
    25%up 60 bps QoQ
    Q2 FY26
    Incentives on closings
    10.4%down 50 bps QoQ
    Q2 FY26
    House costs per square foot
    $75down 5% YoY, down 1% QoQ
    Q2 FY26
    Homebuilding SG&A expense ratio
    10.1%up from 9.1% in Q2 FY25
    Q2 FY26
    Financial services pretax income
    $37Mdown from $43M in Q2 FY25
    Q2 FY26
    Mortgage capture rate
    85%comparable to Q2 FY25
    Q2 FY26
    Effective tax rate
    24.2%
    Q2 FY26

    Generally in line with annual guidance of 24.5%.

    Shares repurchased
    3.1M
    Q2 FY26
    Diluted shares outstanding
    191Mdown 10M shares or 5% YoY
    Q2 FY26
    Land investment
    $1.4B
    Q2 FY26
    Lots under control
    228,000down 6,000 from FY25 end
    Q2 FY26 end
    Lots under option
    55%
    Q2 FY26 end
    Cash balance
    $1.4B
    Q2 FY26 end
    Debt-to-capital ratio
    12.3%
    Q2 FY26 end
    Options and lot premiums on homes closed
    $107,000comparable to prior year and prior quarter
    Q2 FY26
    Net new orders
    15,570up 5% YoY (720 more homes)
    YTD FY26
    Build-to-order mix of orders
    39%up 500 bps from prior year
    YTD FY26

    As a percent of total orders.

    Homes started
    14,378
    YTD FY26

    Intentionally started fewer homes than net new orders to manage spec inventory.

    Spec homes in production
    8,800
    End of FY24
    Spec homes in production
    7,200
    End of FY25

    Deals & partnerships

    1
    ICGDivestiture of the ICG business, focused on structural components for site-built homes.

    The company is moving through the process of divesting ICG, with more details expected next quarter. This is not related to manufactured housing, which is addressed by the Road to Housing Act.

    Risks & headwinds

    4
    Global tensions, macroeconomic uncertainty, and interest rate movementsQ2 FY26 and early July

    consumer activity was impacted to varying degrees

    Mitigation: PulteGroup's diversified operating model and balanced price pace approach.

    Elevated incentive loadsQ3 FY26 and beyond

    incentive loads are going to remain relatively elevated

    Mitigation: Disciplined land underwriting, diversified operating model, balanced price pace.

    Rising commodity costs (lumber, oil)Future quarters, potentially early next year for lumber flow-through.

    Lumber costs are high; oil prices impact land development costs (asphalt, underground piping, diesel fuel).

    Mitigation: Procurement teams focus on cost control and identifying areas where prices exceed market warrants.

    Affordability challenges for consumersOngoing

    Not explicitly quantified, but mentioned as a driver for elevated incentives.

    Mitigation: Offering choices and upgrades that buyers value, managing incentives.

    What to watch in Q3 FY26

    5

    ICG Divestiture Progress

    next quarter
    Currentmoving through the process
    TargetMore details shared, process completion

    Why it matters

    Provides clarity on the future of the ICG business and its impact on the company's focus.

    As it relates to ICG, we're kind of moving through the process of that divestiture, we're making great progress. And I think we'll have more to share in the next quarter.

    Q&A highlights

    5

    Expand on "early signs of stabilization" and identify specific geographies showing improvement.

    Ryan Marshall confirmed stabilization in 4 out of 5 regions (excluding West), highlighting strength in Midwest (Columbus, Cleveland, Chicago), Southeast (Coastal Carolinas, Greenville), and particularly Florida (up 19% YoY). He also noted positive trends in Dallas and Houston.

    “all of our 5 regions that we report on, we saw positive year-over-year growth in 4 of them. The West being the one that I think, is probably still the softest. Specific to the 4 where we saw some stabilization and I think some positive signs, I would definitely call out some of the Midwest markets... I'm also encouraged by what we're starting to see in Texas I'm not ready to declare victory there, but the fact that we saw positive year-over-year orders, I think, is a good sign.”

    asked by John Lovallo · answered by Ryan Marshall

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Shift to Build-to-Order

    PulteGroup is successfully executing its plan to increase build-to-order (BTO) homes, with BTO sales reaching 45% of new orders in Q2 FY26, up 500 basis points year-to-date. This strategy focuses on move-up and active adult buyers who value choice, leveraging recovered build cycles (down to 100 days or fewer) after global supply chain disruption🌐s. The long-term goal is to achieve a 60% BTO mix, likely by sometime next year.

    02

    Disciplined Inventory Management

    The company has dramatically reduced its finished spec inventory to 1.3 homes per community at quarter-end, down from 1.9 in Q2 FY25 and 8,800 specs in production at the end of 2024 to 6,600 currently. This reduction was achieved while growing overall community count, demonstrating a commitment to selling from a position of strength and rebalancing inventory.

    03

    Market Dynamics and Regional Performance

    Q2 FY26 saw typical seasonal demand patterns, with week-to-week variability influenced by global tensions, macro uncertainty🌐, and interest rates. Strong demand was observed in Florida (orders up 19% YoY), Midwest markets (Columbus, Cleveland, Chicago), and Southeast markets (Greenville, Coastal Carolinas). Early positive signs were also noted in Dallas and Houston, while West operations (California, Pacific Northwest) remained softer, requiring aggressive competition.

    04

    M&A Strategy and Industry Consolidation

    PulteGroup approaches M&A with a focus on strategic fit and enhancing the business, rather than just size. The company prefers smaller, tuck-in transactions that build local market scale, viewing acquisitions primarily as a way to acquire land. Management notes that increased industry consolidation points to the growing importance of scale for access to land and labor, but has not yet observed changes in competitive behavior.

    05

    Cost Management and Future Outlook

    The company achieved a 5% year-over-year reduction in Q2 house costs to under $75 per square foot, attributing this to effective procurement. While lumber costs are expected to lose their tailwind, management is closely monitoring commodity prices like oil, which significantly impact land development costs (asphalt, underground piping, diesel fuel) and could lead to modest year-over-year cost increases (1-2%) in the future.

    06

    Capital Allocation and Financial Strength

    PulteGroup maintains a strong financial position with $1.4 billion in cash and a low debt-to-capital ratio of 12.3%. The company continues to invest significantly in its land pipeline ($1.4 billion in Q2, $2.7 billion YTD, targeting $5.4 billion for FY26) while also returning capital to shareholders through dividends and share buybacks (3.1 million shares repurchased for $373 million in Q2).

    AI-generated summary of the company’s earnings call. Not investment advice.