Confronting heavier incentives, price cuts, tepid demand and margin pressure, PulteGroup opened the year with a mix-shift pivot that leans more heavily on build-to-order and active adult sales.
Pulte’s Конференция по итогам первого квартала 2026 года, held on Thursday, indicates that the nation’s third-largest homebuilder by sales volume made progress on this goal, despite an added layer of economic uncertainty sprinkled into the operating backdrop.
Rather than chasing volume, Pulte focused on profitability.
This meant that the builder actively reduced its new spec deliveries, selling through old spec inventory and matching new starts with sales cadence.
What’s more, PulteGroup adapted its course to play to its strengths, with a greater share of active adult and build-to-order sales, both of which tend to drive higher margins.
While other builders, such as M/I Homes, reaffirmed their commitment to maintaining pace with spec deliveries, Pulte is taking a contrarian approach.
“We have said we are not going to chase volume. We are going to get our company back to a build-to-order model, which we are doing,” PulteGroup’s President and CEO Ryan Marshall said on the earnings call.
Long viewed as one of the more margin-resilient public homebuilders, Pulte believes this strategic shift will allow it to exit 2026 with stronger margins than it started with.
Still, execution will be challenging, and the payoff is unlikely to materialize overnight.
A shifting product mix
Pulte is executing on plans to shift the enterprise’s business back to a historic mix of 60% BTO and 40% spec. This will take some time, likely until at least Q1 of next year. However, Marshall said that he is happy with his team’s progress so far. Build-to-order inventory now accounts for 43% of net new orders, up from 40% last year.
“This quarter was just the first step in a process that will take several quarters to complete, but I am encouraged by such early success,” Marshall said.
Pulte reduced its total spec inventory by nearly 900 homes from a year ago and its specs under production by 24% year-over-year, underscoring progress toward its stated goal.
Another benchmark is keeping the number of finished specs per community to a level typically between 1.0 and 1.5. Pulte finished the quarter with 1.4 finished specs per community, on the higher end of the range.
When asked whether the team is working on lowering that number closer to the bottom of that range, Marshall responded:
“The way I would guide you on that is that we are inside the target range that we want for specs, and we are very comfortable operating at the lower end or the higher end of that range. We want to be inside that range. Beyond that, the range will be driven by specific community-level decisions and the type of buyer we are going after, and whether it is a true entry-level or more of a move-up type community. That is the reason we gave a range on that,” Marshall said.
In addition to a greater emphasis on BTO, Pulte also plans to continue growing its Del Webb active adult brand, which delivers the best margins of any product or customer segment Pulte serves. Not long ago, Del Webb accounted for about 20% of closings.
Last quarter, the active adult brand represented 23%, first-time 38%, and move-up 41%. Del Webb is expected to soon climb to 25% of closings.
Price and margin pressures grow
Marshall sounded optimistic about Pulte’s standing and future growth outlook. However, average sales prices (ASP) continued to fall across all buyer groups, and margins compressed even further. The average sales price fell 5% year over year to $542,000.
“ASP was down mid-single digits across each buyer group and reflects the generally competitive conditions and elevated incentives that exist in many markets across the country,” PulteGroup’s Executive Vice President and CFO Jim Ossowski said.
Incentives now account for 10.9% of gross sales price, up 290 basis points from last year and 100 basis points from last quarter. Elevated incentives are a major contributor to compressed margins, Ossowski pointed out.
Gross profit margins also fell to 24.4%, down 310 basis points compared with a year ago, and up slightly on a quarter-over-quarter basis.
The builder forecasts that margins will likely compress even further next quarter, but official guidance calls for a resurgence in the latter half of the year, with the full-year margin guide at 24.5%
“I would note that we expect Q2 gross margins to be the low point for 2026. We are forecasting gross margins to recover in the back half of the year as we benefit from increased closings of higher margin active adult and build-to-order homes,” Ossowski explained.
Incentive use will likely stay elevated across the homebuilding industry for some time due to a difficult macro environment and competitive homebuilding landscape, Ossowski said. However, he also believes that Pulte’s incentive rate will tick down, as the product mix that it is leaning into more heavily – less price- and interest-rate-sensitive homebuyers – generally requires fewer incentives.
“We are assuming a higher incentive load, but we would expect it to likely come down, driven by a couple of factors. One would be more build-to-order and more move-up and active adult business, where we tend to incentivize less. We have also cleared a lot of the finished spec inventory, which we were carrying with a higher incentive load,” he explained.
Географическое распределение
Marshall noted that Florida has been a major bright spot for Pulte, despite reports that many other builders are struggling in that state in recent quarters due to affordability constraints, flattening population growth and high insurance costs. This isn’t necessarily a surprise, since Pulte’s Del Webb brand plays well among the Sunshine State’s high population of retirees.
Still, the growth in Florida is impressive. Net new orders grew 18% in the state year over year, compared to a 3% increase company-wide.
“We are very happy with most of what we are seeing out of Florida, and this has been the third or fourth quarter in a row where we highlighted the strength of the Florida market. If you went back a year ago, I think we were an outlier, outperforming a market that was arguably a little tougher. Florida has continued to get better over the last 12 months, and it is at the best point that we have seen it in a while,” Marshall said.
Marshall also pointed to the Midwest as a positive region.
“Our Midwest business also tends to be more move-up and active adult, which, as we have highlighted, continues to be one of the stronger consumer groups,” he said.
Spring selling season demand is solid, despite uncertainty
Pulte’s closings fell 7% year over year, but the builder is clearly willing to sacrifice on sales pace to maintain a higher profit margin than most of its public competitors.
Despite some economic uncertainty and volatility, it is too early to say what the long-term impacts will be from the war in Iran, Marshall said. The earnings call revealed that the first quarter developed like a typical spring selling season, as it normally does, with orders increasing each month.
“Given everything that is happening in the world, demand has actually held up better than might be expected, and could certainly improve if global tensions eased and interest rates came back toward 6%.
Marshall did acknowledge that there is a high level of uncertainty and that costs could go up if economic disruptions continue for too much longer. After all, as Marshall said, “we did not have any of the current geopolitical disruption on our bingo card” to start the year.
“We are in a conflict. If it continues, there will be real cost increases. But we are not going to overreact to the whipsawing of markets up and markets down based on what is happening on a day-to-day basis from the conflict,” he explained.
However, he also reported that the spring selling season was quite strong. In particular, move-up and active adult buyers, who are less sensitive to ставка по ипотеке volatility and economic uncertainty, performed well.
“When rates came down to 6%, maybe even a touch below 6%, things were moving along really well. Despite the things that are going on globally, it is still, I think, a very good spring selling season, and we are pretty pleased with what we have delivered and how it has set us up for the full year,” Marshall said.
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