Aug 20, 2026 earnings call — Margin improvement and land strategy update
Total revenues were $706 million, slightly above guidance midpoint; gross margin improved to 14.6%.
Revenue $0.7B (est $0.7B) · EPS $-0.70 (est $-0.56) · Next-quarter revenue outlook $0.8B–$0.9B
Key quotes
"Importantly, today's incentive environment is already incorporated into our new underwriting assumptions for the more recent land acquisitions."
"Consumers are still researching communities as evidenced by the strong website traffic in July 2026, website visits were higher than in all but 1 year since 2019."
"At the end of the third quarter, 82% of our lots were controlled in fiscal year 23 or later."
Analyst Q&A 3
construction cost rise; ICE raids impact
Q (Natalie Kulasekere · Zelman & Associates): She asked what drove the small increase in construction cost per square foot and whether the company has been able to negotiate those costs down. She also asked if recent ICE raids disrupted operations in any markets.
A: Management said the increase was small, with minor increases in a few areas and lumber starting to rise. They are pushing back on material and labor costs and have reduced costs since the beginning of 2025. They have not heard of recent ICE raids; the last one they recall was probably 3 or 4 months ago, and labor has not been an issue given lower demand.
"there is been minor increases in a few areas, and we are seeing lumber start to increase as you point out." — Brad G. O'Connor (CFO)
buyer incentives and Saudi project timing
Q (Alex Barron · Housing Research Center): He asked how the company expects incentives to move now and whether their strategy has changed. He also asked about bringing the Saudi Arabia business onto the balance sheet and what that means for deliveries and financials.
A: They said incentives actually went down this quarter despite mortgage rates increasing, but future movement is hard to predict. A larger share of deliveries are from newer properties where higher incentives were already built into underwriting, which helps. Regarding Saudi Arabia, they consolidated a joint venture in Q1 so balance sheet items changed; there have been no deliveries this year, they expect some deliveries starting in the fourth quarter and then in 2027, and the business is currently a minor investment with little capital deployed.
"what is clear is that we are getting a greater percentage of our deliveries from newer properties where we have already anticipated higher incentives during underwriting that will help." — Ara K. Hovnanian (CEO·CHAIR)
revenue guide, ASP, community growth, land
Q (Jay McCanless · Citizens): He asked whether the 800 million to 900 million revenue guide assumes any land sales, and what the company expects for ASP this quarter and next year. He also asked when community count will start rising, how sustainable gross margin is, and whether land acquisition opportunities exist.
A: They said no land sales are assumed in the revenue guide. ASP this quarter should be similar to the most recent quarter and is expected to gradually rise quarter over quarter as new communities replace lower-priced Aspire products, with further increases over coming years. They expect community count to increase in the fourth quarter and to grow in 2027; gross margin should continue to improve though there may be a typical Q4-to-Q1 degradation of about 30 to 50 basis points; and they are seeing land opportunities, having optioned and controlled more lots during the quarter and gearing up land acquisition efforts.
"You are going to just gradually see our ASP go up quarter over quarter as we are bringing in new communities." — Brad G. O'Connor (CFO)