Between consumer confidence shocks, inflationary pressures, and geopolitical uncertainty, 2026 has presented numerous hurdles for builders. Despite inconsistent traffic and buyer hesitation, many public builders highlighted the resilience of demand in the second-quarter earnings cycle.
Many reported year-over-year growth in closings or orders while noting a softening in the financing incentives necessary to entice buyers. At the same time, buyers are taking more time to evaluate the value proposition offered by builders, with less urgency to close against a backdrop of economic uncertainty.
The quarter also highlighted a range of strategic approaches that are finding success in the current market. PulteGroup and KB Home continue to shift their product mix more heavily toward built-to-order homes, viewing the margin benefits, greater certainty, and personalization as differentiators. Conversely, M/I Homes remains committed to a heavy spec mix, with nearly 80% of second quarter sales accounted for by spec homes. Meritage Homes, a 100% spec builder, is shifting its mix more heavily toward first-time move-up buyers, pursuing the millennial demographic while recognizing the challenges entry-level buyers continue to face.
The second quarter also underscored the role scale and consolidation are continuing to play in the industry. The purchase of Taylor Morrison by Berkshire Hathaway and the merger between Beazer Homes and Dream Finders Homes are the latest examples of the race for scale in the home building sector. Each deal creates organizations that would rank in the top 10 of the Builder 100 list and represent the fifth and sixth deals involving public companies since 2024. The pursuit of scale is becoming an increasingly important element of the home building playbook given the growth, intention, and activity from large private companies and overseas-backed operators.
What They’re Saying: On Strategy, Differentiators, and Demand
“We work every day to leverage our industry-leading platform, unmatched scale, efficient operations, and experienced teams to bring homeownership opportunities at affordable price points to more Americans…Affordability constraints and cautious consumer sentiment continue to impact new-home demand.” —Paul Romanowski, president and CEO, D.R. Horton
“Buyer traffic is inconsistent. Intent is high, but urgency to close is still measured and deliberate rather than confident and energized. We continue to make homeownership achievable and attractive through value-oriented pricing, compelling financing, and the speed and quality of our customer engagement. While currently urgency is lacking, we continue to build the platform to serve buyers even better in a normalized market.” —Stuart Miller, executive chairman and co-CEO, Lennar Corp.
“We continued to execute a successful transition back to built-to-order, as built-to-order sales increased to 45% of new orders in the quarter. The ongoing increase in built-to-order is consistent with the plan we articulated coming into this year, namely, to increase the percentage of built-to-order homes sold among our move-up and active adult home buyers. These are individuals who expect choice, and our operating model allows them to choose their preferred lot and select options they desire.” —Ryan Marshall, president and CEO, PulteGroup
“Our longer-term plan includes an intentional shift of the portion of our business to first-time, move-up homes as we continue to serve one of our key buyer demographics, the millennial customer, as they begin to look toward their next home purchase, while still continuing to offer our entry-level products for Gen Z and move-down customers. This is a return to our long-term stated target of a diversified portfolio of offerings, which was temporarily on pause over the last couple years to align with prevailing demand trends.” —Phillippe Lord, executive vice president and CEO, Meritage Homes
“The fundamental premise of our built-to-order model is putting the customer at the center from day one. Our buyers choose their lot, floor plan, and personalized finishes. The result is a home that has real specific value to the people who will live in it. Homes built to customer specifications do not require heavy incentives to sell. The buyers are already invested in and feel a connection to the homes they created. This is in contrast to a speculative business model where incentives are used to create value.” —Rob McGibney, president and CEO, KB Home
“We are quite simply a more efficient and less cyclical home builder. Even in a difficult market, our business continues to perform well…In this environment, we are pleased to be serving a more affluent customer base, a segment of the housing market that has proven more resilient despite the challenges in the broader market. Overall, our buyers are less sensitive to affordability pressures as they benefited from years of income growth, stock market gains, and home equity appreciation.” —Douglas Yearley, executive chairman of the board, Toll Brothers
“We were encouraged by our order activity in the quarter, especially as the strength in our sales was accompanied by a continued decline in incentives. We delivered 2,506 homes during the quarter, a 25% sequential increase and our incentives on these homes averaged 1,200 basis points, down approximately 50 basis points from the first quarter and 100 basis points from fourth quarter 2025 levels. Assuming current market conditions, we expect incentives on closed homes in the third quarter to be consistent with levels experienced in the first half of this year.” —Rob Francescon, CEO and president, Century Communities
“In terms of product mix, we have seen a slight increase in the sale of our move-up product. Specifically, during the quarter, our Smart Series, which is our most affordable line of homes that caters primarily to the first-time buyer, accounted for 43% of company-wide sales. This compares to 52% a year ago…Approximately 78% of our second-quarter sales were spec homes, roughly the same as the first quarter.” —Robert Schottenstein, CEO and president, M/I Homes
“The home building market continues to be challenging, but our teams have worked hard to identify opportunities to improve our cost structure with the goal of delivering more affordable homes to our customers. We believe costs will need to continue to trend down, perhaps significantly, to have a meaningful impact on market-wide housing results…In line with our growth initiatives, our year-over-year active community count increase of 30%—reaching 353 communities—was the strongest in the industry. In the coming quarters, we will focus on optimizing these communities by executing our planned absorption targets and margin underwriting to drive improved profitability and return on participating equity.” —Patrick Zalupski, CEO, Dream Finders Homes
“[We are] supporting affordability with targeted mortgage rate buydowns to maintain sales pace while we work through older lower margin lots and quick move-in inventory. At the same time, we are transitioning toward newer communities where today’s incentive environment is already built into the land underwriting, which we believe supports a path to better margins and returns over time.” —Ara Hovnanian, chairman, president, and CEO, Hovnanian Enterprises
“We are beginning to see some improvement in the land market, with a broader set of opportunities becoming available and transaction economics improving. We are finding more deals where pricing and terms align with our disciplined underwriting standards, particularly as new projects are brought to market later in the development process…Beyond 2026, our development pipeline positions us well for additional community openings in 2027 and continued community count growth.” —Eric Lipar, chairman and CEO, LGI Homes
“One of the primary differentiators from many of our peers is that we do not engage in high-interest cost land banking relationships that can distort a builder’s economic leverage and risk. That can give a land banker indirect control over a builder’s lot purchase timing. We have always believed that a self-development focused strategy provides us with better control in determining the pace of land and lot deliveries and higher margins and returns.” —Jim Brickman, CEO, Green Brick Partners
“Overall, our company executed well in the quarter against the home building backdrop that continues to be marked by uncertainty and affordability challenges for new-home buyers. We saw consistent traffic and a relatively stable sales pace throughout the quarter, averaging roughly three sales per community per month, which we maintained through a targeted use of sales incentives…We grew quarter-end community count by 20% on a year-over-year basis to 110 active communities. We know higher volume will lead to better expense leverage over time. At the same time, we remain disciplined on our land acquisition front by adhering to our underwriting standards and walking from deals that do not meet those standards.” —Greg Bennett, vice chairman and CEO, Smith Douglas Homes
