NVR Q2 2026: net new orders rose 9% and cancellations fell, but 8% fewer closings, lower prices and higher lot costs cut gross margin to 19.2% and net income 29% to $236.5M ($83.96/share diluted).
Revenue
$2.3B
-10.5% YoY
Net income
$237M
-29.1% YoY
Diluted EPS
$83.96
-22.6% YoY
Operating margin
13.7%
NVR Q2 2026: orders up 9%, but margins and closings fall, and net income drops 29%
NVR's second quarter of 2026 (three months ended June 30) had two sides. Demand improved: net new orders rose 9% to 5,885 homes, and fewer buyers walked away (the cancellation rate fell to 14.9% from 16.5%). Profit got worse. The company settled (closed and handed over) 8% fewer homes than a year earlier, sold them at lower prices, and kept a smaller share of each sale as gross profit. Consolidated revenue fell 10% to $2.33 billion, net income fell 29% to $236.5 million, and diluted earnings per share fell 23% to $83.96. EPS fell less than net income because NVR has spent heavily on buying back its own stock (more on that below).
NVR's per-share figures look large (EPS near $84 for one quarter) because the company has never split its stock, so each share trades for thousands of dollars. The size of the number is normal for NVR.
How NVR's model works (and why it matters this quarter)
Most large homebuilders buy raw land and develop it themselves. NVR mostly doesn't. It signs fixed-price finished lot purchase agreements (LPAs) with outside land developers. NVR puts down a deposit, typically up to 10% of the lots' price, for the right to buy finished lots later. If the market turns, NVR can walk away and lose only the deposit, not the land. As of June 30, NVR controlled about 184,400 lots this way (up from 180,100 at year-end), backed by roughly $1.01 billion in cash deposits. NVR also builds mostly homes that are already sold rather than speculative ones.
This limits NVR's exposure to a housing downturn, but that protection shows up in the accounts in two ways this quarter:
Deposit write-downs. When NVR expects to walk away from, or renegotiate, a lot contract, it writes down the deposit. These contract land deposit impairments were about $21.7 million in Q2, up from $13.2 million a year earlier. NVR carries an impairment allowance of about $135.0 million against deposits on about 20,950 lots.
Lot costs. Lot prices are fixed when the contract is signed, often years ahead. So lots contracted during the land-price run-up are now reaching the income statement at the same time home prices are soft. The 10-Q names "higher lot costs" as a margin headwind in every segment.
Key figures
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Consolidated revenue is homebuilding revenue plus mortgage banking fees ($46.6M vs. $50.5M). NVR doesn't report an operating-income line, so pre-tax margin is shown as the operating-margin measure: income before taxes ($318.6M vs. $447.1M) divided by consolidated revenue.
Why revenue fell: fewer closings, not weaker demand
Homebuilding revenue fell 10.5% because NVR settled 8% fewer homes at a 3% lower average price. The 10-Q says the drop in settlements was "primarily attributable to a lower backlog turnover rate." In other words, NVR entered the quarter with homes under contract but converted fewer of them into closings than last year. Revenue for a homebuilder follows orders from earlier quarters. Q2's closings mostly reflect sales made in late 2025 and early 2026, when NVR's backlog was lower: it started 2026 with 15% fewer backlog units than it had a year earlier.
Orders are a different story. New orders rose 9% for two reasons, according to the MD&A: 4% more active communities (442 vs. 426 on average) and a 5% higher absorption rate (sales per community per month). That's real demand improvement, not just more selling locations. But it came at lower prices. The average new-order price fell 5%, which NVR puts down to "pricing pressure and a relative product mix shift in New Orders from single family detached homes to single family attached homes, which generally sell at lower prices." Some of that price decline is mix (more townhomes) and some is actual price cuts and incentives. The filing doesn't split the two.
Why margins fell: three separate pressures
Homebuilding gross margin (the share of home-sale revenue left after the cost of building the home and buying the lot) fell to 19.2% from 21.5%. The 10-Q names three causes:
Higher lot costs, from lot contracts signed at older, higher land prices (see above).
Pricing pressure "due to continued affordability challenges and weak consumer sentiment."
Larger deposit impairments: $21.7M vs. $13.2M. That's about 0.95% of homebuilding revenue this year vs. about 0.5% last year, so roughly 0.4 points of the 2.3-point margin decline came from write-downs rather than from the homes themselves.
Overhead didn't help. SG&A (selling, general and administrative costs) was roughly flat in dollars at $150.7M, but rose to 6.6% of revenue from 5.9% because revenue shrank.
Below the operating line, homebuilding other income (mostly interest earned on cash) halved, to $12.1M from $25.1M. NVR's cash is shrinking because of the buyback: corporate interest income fell to $11.2M from $20.3M. The effective tax rate was about the same, at 25.8% vs. 25.4%.
Segments: the Mid Atlantic drives most of the decline
Segment
Q2 2026 segment profit
Q2 2025
Change
Gross margin (2026 vs. 2025)
New orders YoY
Mid Atlantic
$105.6M
$191.4M
-45%
20.9% vs. 23.5%
+8%
North East
$38.9M
$58.0M
-33%
22.0% vs. 26.2%
-8%
Mid East
$58.9M
$61.7M
-5%
20.4% vs. 21.0%
+11%
South East
$48.1M
$51.5M
-7%
17.7% vs. 18.7%
+14%
Mid Atlantic (Maryland, Virginia, D.C. and nearby; NVR's largest region) accounts for about $85.8M of the roughly $111M fall in total segment profit. Revenue there fell 22% on 18% fewer settlements and a 5% lower settlement price. It entered Q2 with 6% fewer backlog units and turned them over more slowly. Orders did rise 8%, but only because of 11% more communities; sales per community actually fell 3%, and new-order prices fell 6% as sales shifted to lower-priced communities.
North East (New Jersey, eastern Pennsylvania) is the one soft spot for demand. Orders fell 8% on a 16% lower absorption rate, which the filing attributes to "weak consumer sentiment." Cancellations jumped to 20.6% from 12.9%. Gross margin fell the most here, by 4.2 points.
Mid East and South East held up best. Absorption rose 9% and 14% respectively, which management attributes to "better product positioning in certain markets." Their profit declines were small and came from margin, not volume.
Mortgage arm: smaller, and a notable shift toward adjustable-rate loans
NVR's mortgage subsidiary (NVRM), which lends only to NVR's own homebuyers, earned $25.4M before tax vs. $29.6M. Loan volume fell 13%, in line with homebuilding revenue, and gains on selling loans fell. NVRM's capture rate (the share of NVR's buyers who finance through NVRM) slipped to 85% from 87%. The more telling change: adjustable-rate mortgages were 21% of loan volume, up from 5% a year ago. Buyers choosing ARMs to get a lower starting payment is a direct sign of the affordability pressure management describes.
Buybacks: how EPS fell less than profit
In the first half of 2026 NVR repurchased 144,896 shares for $989.7M, an average of roughly $6,830 per share. That cut the diluted share count 8.4% year over year, which is why EPS fell 23% while net income fell 29%. It also used a lot of cash: cash, restricted cash and equivalents fell $759.6M in the half, to about $1.1B at June 30. NVR still has $900M of Senior Notes due May 2030, no borrowings on its credit lines, and about $1.06B left under its buyback authorization.
Year to date, consolidated revenue is down 16% ($4.21B vs. $5.00B), net income is down 31% ($434.8M vs. $633.3M), and diluted EPS is down 26% ($151.38 vs. $203.20). The first-half effective tax rate was lower (23.8% vs. 25.4%), helped by $13.5M of tax benefits from stock-option exercises, most of them in Q1.
Takeaway: NVR's sales are recovering (orders +9%, cancellations down, backlog units +9%), but it's buying that volume with lower prices while older, pricier lot contracts flow through its costs. The backlog shows the result: 9% more homes but only 5% more dollars, at a 4% lower average price ($453,900 vs. $472,100). So the second half should bring more closings but not better per-home economics.
Outlook
NVR doesn't give numerical guidance. The 10-Q's outlook is cautious: management expects affordability, high inventory in some markets, weak consumer sentiment and economic volatility to "continue to weigh on demand and home prices," and expects "further margin pressure from higher land prices and from repositioning of communities."
Our read:
Volume should turn positive. NVR says it expects to settle substantially all of its 10,998-unit backlog within twelve months, and the business is seasonally heavier on settlements in the second half. With 9% more backlog units than a year ago, H2 settlement counts could exceed last year's, if backlog turnover recovers from Q2's slower pace.
Margin is the open question. Backlog prices are 4% lower, management is signalling more land-cost pressure, and write-downs are rising. So we don't expect gross margin to recover to the 21%+ range in the near term. Deposit impairments are the figure to watch: they're the early signal of how many lot contracts NVR is choosing to walk away from or renegotiate.
EPS will keep getting help from buybacks, but less of it. At a pace of about $1B per half-year, NVR is spending faster than it's earning (H1 operating cash flow was $188M). Cash can't keep falling at $760M per half, so either the buyback slows or share-count reduction becomes a smaller EPS tailwind.
The Q3 2026 10-Q (quarter ending September 30) is not yet filed.