Sep 17, 2026 earnings call — Q3 results and land strategy
Delivered 20,840 homes within guidance and gross margin improved to 15.8%.
Revenue $8.0B (est $8.3B) · EPS $1.23 (est $1.27)
Key quotes
"That is approximately 11,800 homesites owned against 476,000 controlled or about 6 years of supply in total."
"Fewer families can afford to both produce a down payment and qualify for a mortgage as in many of our markets, almost 50% of our visitors cannot immediately qualify."
"Our record cycle time of 116 days is down from 121 days last quarter and 126 days a year ago."
Analyst Q&A 5
inventory turns and cash uses
Q (Susan Maklari · Goldman Sachs): Analyst asked where inventory turns can go over time and how that helps balance the land bank and rebuild the pipeline. She also asked what cash level they feel comfortable holding and how they plan to use cash, including buybacks.
A: They said inventory turns have been hovering in the same range and will likely stay around that range unless market conditions improve significantly. On cash, they said balances swing through the quarter, they split uses between debt reduction, stock buyback and dividend payment, and they have a $3.1 billion credit facility so they manage lower cash when possible. They also said they are opportunistic and continue buying stock as the price declines.
"In terms of how we will use capital, if you look at this past quarter, it's split between debt reduction, stock buyback and dividend payment, you're going to continue to see a balance between those as we go forward." — Stuart Miller (CEO·CHAIR)
labor availability and tech cost timing
Q (Trevor Allinson · Wolfe): Analyst asked whether labor constraints will limit the company's ability to keep lowering costs and where labor pressure is showing up. He also asked when the technology and SG&A investments will start to show financial benefits.
A: Management said labor pressure is very geography specific and moves around, but their favored position with trade partners gives them visibility and helps partners allocate crews to where they need them. They said roughly 20% of divisions are seeing greater pressure now, while many have little or no impact. On SG&A, they said they made significant investments, some were false starts and some core, costs are already being reduced slowly, and they expect some normalization through 2027.
"I'd say roughly 20% of our divisions right now are seeing greater pressure than the vast majority." — David Grove
margins, incentives, market outlook
Q (John Lovallo · UBS): Analyst asked why gross margin moved only slightly despite higher deliveries and what level of incentives, land cost and stick-and-brick are assumed. He also asked why management sees further housing deterioration while others see early stabilization.
A: On incentives, management said they do not see a big difference now and that getting pricing right can reduce incentives in some communities. They warned the market can shift unexpectedly, so they remain cautious despite current confidence. They added the housing impact differs by product and price point, with the affordable end more sensitive to rates and buydown costs rising while higher-end is less affected.
"I think that you have differentiation around or delineated by product type and price point." — Stuart Miller (CEO·CHAIR)
higher inventory value and paused land deals
Q (Stephen Kim · Evercore): Analyst asked why finished homes and construction-in-progress value per unit rose so much and whether that is driven by land costs or option fees. He also asked if inventory will drop in 4Q to drive cash flow and what percent of land takedowns have been paused and the project hit from extending terms.
A: They said the rise reflects land deals negotiated at earlier, higher price ranges and longer-accumulating option maintenance fees because growth was moderated. They expect inventory to drop and for fourth-quarter cash flow to be better, but it depends on delivery volume and market uncertainty. On paused takedowns, management did not give a percent paused but said pausing increases the real-time cost via option maintenance fees, is affecting margins, and they are re-evaluating and renegotiating deals with capital cost in mind.
"So in terms of land and land costs, as I said earlier, a lot of our land and land deals were negotiated at a different time to a different price range." — Stuart Miller (CEO·CHAIR)
mortgage buydowns and resale competition
Q (Jay McCanless · Citizens Bank): Analyst asked whether the company can quantify rising mortgage buydown costs and what they've seen in September. He also asked whether the resale supply pressure in Texas and Florida is broad or concentrated.
A: They said they could not give a simple number for buydowns because it depends on many variables: fixed versus ARM, government versus conventional, ARM term, starting rate and how much must be bought down. On resale supply, they said resales are becoming more competitive, some sellers are willing to cut price as days on market increase, and that can both add competition and in some cases unlock buyers who then buy new homes.
"So it isn't necessarily a negative, but at least for the time being, we are seeing more competition than we've seen in a long time from the resale market." — Stuart Miller (CEO·CHAIR)