Despite softer closings and home sales revenues in the first quarter of 2024, LGI Homes grew community count by 21.1% to a company-record 120, providing a runway for future growth for the home builder.

Chairman and CEO Eric Lipar called out community count and closings growth as top priorities for 2024 during LGI Homes’ previous earnings call in February. While the strong community count growth is in line with the home builder’s goal of 25% to 30% annual growth for 2024, the year-over-year decline in home closings comes after LGI shared projections of double-digit closing growth in 2024.

The builder reported 1,083 closings in the first quarter with an average sales price of $360,897, generating home sales revenue of $390.9 million. In the first quarter of 2023, LGI Homes closed 1,366 homes at an average sales price of $356,777, generating home sales revenue of $487.4 million.

Lipar says despite the slower start to the year for home closings, lead and sales trends improved in February and “accelerated further” in March.

“The resulting increase in net orders allowed us to finish the quarter with 1,335 homes in backlog, compared to 590 homes in backlog when we ended the fourth quarter, putting us in a much stronger position entering the second quarter,” Lipar said during the home builder’s earnings call.

“It’s also worth noting that these improvements were accomplished solely through marketing and training, not through price discounting or increasing incentives. These recent sales trends give us confidence that demand remains healthy, supported by positive long-term fundamentals, including strong demographic trends and a limited supply of affordable homes,” Lipar continued.

Lipar said as a result of the improvements in conditions, LGI Homes generated 800 net sales in each of the last two months, representing an absorption pace of six homes per community per month. The improvement in sales, coupled with the continued growth in community count, gives Lipar confidence the company can deliver on its guidance expectations for closings set out for 2024.

Lipar said much of the home builder’s land that has been acquired over the past few years has been working through development; as more land comes online, LGI Homes projects revenue will grow at a faster pace than inventory, “resulting in increasingly positive impacts to our overall performance and return metrics,” according to Lipar.

At the end of the quarter, LGI Homes owned 54,763 lots and controlled 15,382 lots. Of the home builder’s owned lots, 39,601 were either raw land or land under development, according to chief financial officer Charles Merdian. LGI Homes started 1,810 homes during the first quarter to meet demand and ensure completed inventory is available for planned new community openings throughout 2024.

Despite the continued positive outlook for the remainder of 2024, LGI Homes’ first quarter profit results came in below analyst expectations. The home builder reported a quarterly profit of $17.1 million, or $0.72 per share, compared to $30.0 million, or $1.15 per share, in the first quarter of 2023. Analysts projected profits per share of $1.02 for LGI Homes.