The third quarter earnings season rolled on for the week of Oct. 28 with five additional public builders reporting financial results: D.R. Horton, Meritage Homes, M/I Homes, Dream Finders Homes, and Green Brick Partners.
The tone of earnings calls mirrored sentiments shared by peers last week, with volatile interest rates leading to choppy sales conditions and demand during the period. Additionally, Fed rate cuts during the period and the upcoming presidential election remain important factors impacting demand patterns for prospective buyers.
Despite uncertainty surrounding rates, the reporting builders generated strong results during the period. Several companies, including M/I Homes and Green Brick Partners, generated third-quarter-record levels of revenue during the period. Deliveries and orders also improved significantly on a year-over-year basis in the period, setting companies up to finish 2024 on a strong note.
M/I Homes
A banner earnings period for M/I Homes was highlighted by third quarter record levels of homes delivered, revenue, and profit.
Profit increased 4.6% year-over-year to $145.4 million in the third quarter, or $5.10 per share. Home deliveries for M/I Homes jumped 8% to 2,271 homes while new contracts were essentially flat in the period at 2,023.
“We continue to promote sales in a very targeted and strategic way using mortgage rate buydowns,” CEO and president Robert Schottenstein said during the company’s earnings call. “About one third of our buyers during the quarter used our rate buy down program and about half of our buyers during the quarter purchased our most affordable line of homes.”
The 13th largest builder on the 2024 BUILDER 100 list had 3,174 homes in backlog at the end of the period, down 8% on a year-over-year basis. Backlog units had a record average sales price of $544,000. At quarter’s end, M/I Homes owned approximately 24,000 lots and controlled an additional 52,000 lots.
“As we enter the fourth quarter, we remain on track to open a number of new communities and we are very excited about the many new communities we will be opening in 2025,” Schottenstein said. “Over average community count for 2024 will be about 5% higher than 2023. And we expect to further grow our community count in 2025.”
Dream Finders Homes
Dream Finders Homes, the No. 14 company on the 2024 BUILDER 100 list, experienced positive momentum in the fiscal third quarter, growing home building revenues, home closings, and net new orders during the period.
“Dream Finders continued to demonstrate our focus on long-term growth objectives. We delivered home building revenue growth of 10%, along with increased home closings and net sales of 5% and 9%, respectively, compared to the prior year quarter,” Patrick Zalupski, Dream Finders Homes chairman and CEO, said. “While we experienced some margin erosion in Q3, we are more focused on maintaining our growth expectations.”
The builder’s home building revenue in the period jumped to $986 million, home closings increased to 1,889, and net new orders increased to 1,680 during the third quarter. Dream Finders reported profit of $71 million in the third quarter, or $0.72 per share, down from $76 million, or $0.79 per share, in the third quarter of 2023.
Average sales price of homes closed in the quarter increased 3% year-over-year to $501,536. The builder said the growth in revenue was largely due to the February 2024 acquisition of Crescent Homes. According to Dream Finders, Crescent Homes contributed 223 closings with an ASP of $554,231 during the quarter.
The company’s cancellation rate improved to 13.8% in the third quarter from 14.9% in the third quarter of 2023. The builder attributed the lower cancellation rate and higher net new orders to the successful deployment of sales incentives and the availability of quick move-in homes in its communities.
At the end of the period, Dream Finders Homes had a backlog of 3,996 homes valued at $2.0 billion. The builder’s controlled lot pipeline at the end of the period was 44,825, up significantly from 30,614 at the end of the third quarter of 2023.
Green Brick Partners
Green Brick Partners, the 29th largest company on the 2024 BUILDER 100 list, completed the best third quarter in company history, highlighted by significant year-over-year growth in home closings and net new home orders.
Home closings revenue increased 25.7% on a year-over-year basis to a third-quarter record $523 million. The builder delivered 956 homes in the quarter, a 26.8% increase on a year-over-year basis.
“Net new orders in the third quarter picked up from the previous quarter and grew 11.3% year-over-year to 877 units,” CEO and co-founder Jim Brickman said. “We were pleased to see a rebound of traffic in September, particularly with Trophy Signature Homes. Trophy’s net sales represented 52% of the total sales in the third quarter, compared to 41% in the third quarter last year.”
Brickman said demographic shifts and the housing supply shortage remain tailwinds for housing, particularly in the operating markets of Green Brick Partners.
“We expect to achieve record revenue for fiscal year 2024,” Brickman said. “Reflecting the strength of our team, our active selling communities and homes under construction as of the end of the third quarter are up year-over-year 23% and 21%, respectively.”
Approximately 80% of year-to-date revenue for Green Brick Partners was generated in infill and infill adjacent submarkets, where supply is more constrained.
Green Brick Partners grew profit 23.5% year-over-year to $89 million and increased profits per share to a third-quarter record $1.98.
