Pultegroup, Inc. (PHM)

PulteGroup, one of the largest homebuilders in the United States, reported on 22 October 2026 that third-quarter net income fell to $476 million from $586 million a year earlier 1. It closed the sale of 6,876 homes, 9 percent fewer than a year before, and home sale revenue fell 9 percent to $3.9 billion 1. Its gross margin on home sales, the share of the sale price left after land and building costs, slipped to 24.8 percent from 26.2 percent 1.

The company blamed mortgage rates, which rose sharply during the quarter and most of all in September, along with higher housing costs and tensions in the Middle East 2. To keep homes selling it leaned on discounts, help with closing costs and mortgage rate buydowns, in which the builder pays to lower the buyer's interest rate 2. Incentives ran at 10.4 percent in the quarter, up from 8.9 percent a year earlier, according to the company's call slides 3.

Net new orders fell 6 percent to 6,208 homes, with the West, the Southeast and Texas weaker and Florida stronger 12. Chief executive Ryan Marshall said the company continues to "balance the price and pace of home sales" 1. The open question is the year's end: the company guides to 7,000 to 7,500 fourth-quarter closings at a gross margin of 24.0 to 24.5 percent 3.

PulteGroup dates its founding to 1950, when Bill Pulte built his first home, and it has since delivered more than 875,000 homes 4. In 2009 it bought Centex, a rival builder whose name lives on as one of its brands 4. The housing bust from 2006 through 2011 brought heavy losses and land write-downs, and the company returned to profit in 2012 7.

Through the recovery, closings rose from 17,127 homes in 2015 to 23,232 in 2019, and the average price climbed from $338,000 to $427,000 7. The company leaned on land options, contracts that let it pay for lots later, which came to make up 41 percent of its controlled lots against 11 percent at the start of 2012 7. It added John Wieland Homes, a move-up brand, in January 2016 and American West in Las Vegas in April 2019 for $163.7 million 7.

In January 2020 it bought Innovative Construction Group, a Jacksonville company that builds house frames off site, for $104 million 9. The idea was to make parts of the house in a plant rather than on the lot 9.

The pandemic stalled sales in the first half of 2020, then set off a surge in demand in the second half, fed by near-record low mortgage rates and few homes for sale 8. Home sale revenue rose 26 percent in 2021, on 17 percent more closings and an 8 percent higher average price 8. Lumber costs more than quadrupled from mid-2020 to mid-2021, and the company raised prices to cover most of such increases 8.

Revenue reached $16.2 billion in 2022 as the average price rose 17 percent and the gross margin widened to 29.7 percent 9. Then the Federal Reserve raised rates to fight inflation, mortgage rates followed, and net new orders fell 27 percent for the year 9. Cancellations reached 32 percent in the fourth quarter, against 11 percent a year earlier, and the company slowed starts and raised incentives 9.

Revenue held at $16.1 billion in 2023 and rose to $17.9 billion in 2024, when the company closed 31,219 homes 4. Net income peaked at $3.1 billion in 2024, helped by $333.9 million of insurance reserve reversals, releases of money set aside for insurance claims 4.

In 2025 demand weakened under high mortgage rates and housing costs, revenue slipped to $17.3 billion and closings fell 5 percent to 29,572 4. The gross margin fell to 26.3 percent from 28.9 percent as incentives rose and land cost more, and land impairments, write-downs of land worth less than its cost, reached $77.4 million 4. Net income fell to $2.2 billion, and the company bought back $1.2 billion of its own shares 4.

Homes for three kinds of buyer

PulteGroup buys land, prepares lots and builds houses, mostly single-family detached homes, which made up 83 percent of its closings in 2025 4. It sells to three groups: first-time buyers, who get smaller homes at lower prices, move-up buyers, who pay more for location and space, and active adults 4. In 2025, 38 percent of closings went to first-time buyers, 40 percent to move-up buyers and 22 percent to active adults 4.

Prices of homes closed in 2025 ran from about $150,000 to over $3,000,000, with 82 percent between $250,000 and $750,000, and averaged $566,000 4. In the third quarter of 2026 the average was $561,000 1. Ryan Marshall said more than 60 percent of the business now comes from move-up and active-adult buyers, whom he called more profitable 1.

The brands

Centex, Pulte Homes, Del Webb, DiVosta Homes and John Wieland Homes and Neighborhoods are the brands the 2025 annual report names 4. Del Webb serves active adults, often in communities limited to buyers aged fifty-five and over, with recreation centers, athletic facilities and classes 4. Because those amenities are costly, Del Webb communities tend to be larger, so the cost is shared across more homes 4.

Explore by Del Webb, launched in 2025, takes Del Webb's resort style to a younger crowd, a brand designed "with Gen X and those with a similar mindset in mind" 14. Its communities sell near Tampa, Columbus and Palm Desert, and one near Park City, Utah, is planned for about 900 homes 14.

Where it builds

At 30 September 2026 it built in 48 markets across 26 states, reported as six regions: Northeast, Southeast, Florida, Midwest, Texas and West 2. Florida is the biggest, with $1.10 billion of third-quarter revenue and $208.8 million of pretax income, about 36 percent of the homebuilding total (computed) 2. Pretax income fell 63 percent in Texas and 57 percent in the West, the two steepest drops 2.

Land

Land is the raw material, and the company controlled 224,275 lots at 30 September 2026, 45 percent owned and 55 percent held under option 2. An option lets it pay a deposit now and buy the lots later, or walk away and write off the deposit, which limits the risk of holding land in a downturn 42. It still owed $9.4 billion under those options and has walked away from a number of them 2.

Mortgage, title and insurance

Pulte Mortgage lends to the company's own buyers and sells nearly all the loans to investors, generally within 30 days 4. It made the loans for 64 percent of the homes closed in 2025, while 21 percent of buyers paid cash 4. Financial services earned $46 million before tax in the third quarter of 2026, and the mortgage capture rate, the share of financed buyers it served, was 85 percent 1.

The people

Ryan Marshall became president in February 2016 and chief executive in September 2016 4. James Ossowski became finance chief on 7 February 2025, and Matthew Koart, formerly head of a California developer, became operating chief in May 2023 4. The company employed 6,506 people at the end of 2025, none represented by a union, while subcontractors do nearly all the building 4.

Shareholders elected all eleven directors on 29 April 2026, among them Kristin Gannon, who joined the board in February 1317.

Rivals

The industry is fragmented: PulteGroup, though one of the largest builders, sold only about 4 percent of new homes in the United States in 2025 4. New homes have traditionally been less than 20 percent of all home sales, so it also competes with existing homes and rentals 4. The board measures pay against D.R. Horton, Lennar, NVR, Toll Brothers, KB Home, Meritage Homes, Taylor Morrison and Tri Pointe Homes, among others 6.

Problems

Most of its lawsuits concern alleged construction defects, mainly siding, windows, roofs and foundations, which the company says insurance and reserves cover 24. Liability insurance for builders and their subcontractors has become harder to get 2. A multi-year switch to new enterprise resource planning software, the systems that run its books and operations, is a risk the annual report names 4.

Bill Pulte, grandson of the founder, now heads the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, after a 56 to 43 Senate vote 16. Pulte Mortgage is an approved seller to both 4.

The umbrella, in words

PulteGroup, Inc. is the parent, and Exhibit 21 to its 2025 annual report lists its subsidiaries as of 31 December 2025, noting that certain small ones are omitted 5. They include the Centex, Del Webb, DiVosta and Pulte Homes building companies, Pulte Mortgage LLC, and two insurers formed in Hawaii 5. Innovative Construction Group, LLC, the framing company bought in 2020, is still on that list 59.

It owns John Wieland Homes outright, bought in 2016, and owns parts of joint ventures carried at $141.7 million at 30 September 2026 71. Its notable property is land, 101,760 owned lots, while its offices, including the Atlanta headquarters at 3350 Peachtree Road, are leased, about 1.6 million square feet in all 24.

Control is spread out: there is one class of common shares with one vote each, and no preferred shares were outstanding at the end of 2025 15. The largest holders in the 2026 proxy were Vanguard with 12.94 percent, BlackRock with 11.14 percent, Franklin Resources with 6.73 percent and State Street with 5.24 percent, each from its own Schedule 13G filing 6.

For the full year 2026 the company guides to 27,000 to 27,500 closings, a gross margin of 24.5 to 25.0 percent and overhead of 10.3 to 10.5 percent of home sale revenue 3. It expects an average price between $550 and $560 thousand and operating cash flow of $1.0 billion 3. It plans to invest about $5.3 billion in buying and developing land in 2026 3.

For the fourth quarter it guides to 7,000 to 7,500 closings, a gross margin of 24.0 to 24.5 percent and a tax rate of 24.5 percent 3. It expects its community count, the number of neighborhoods selling homes, to be 3 to 5 percent higher 3.

The company expects many buyers to keep facing affordability problems, its incentives to stay elevated and its pace of house starts to shift with the market 2. It says it is cutting its stock of spec homes, built before a buyer signs, while building more homes to order, and it expects to keep matching its overhead costs to demand 2.

On capital, $1.5 billion of buyback authority remained at 30 September 2026 after the board added $1.5 billion on 22 April 2026, and the program has no expiry 2. The quarterly dividend rose 18 percent to $0.26 a share from January 2026 2.

In February 2026 it sold $800 million of notes due 2031 and 2036 and used part of the money to redeem $337.3 million of notes due 2027 1011. Its senior notes now come due from March 2031 through March 2036 2. Pulte Mortgage's new $625 million funding line with Truist Bank runs to 10 August 2027 12.

Sales at Explore Verona near Tampa are expected to begin in mid-2027, and models at Jordanelle Ridge in Utah are expected to open in late 2027 14. The directors elected in April 2026 serve until the 2027 annual meeting 13.