PulteGroup Q2 2026: net new orders rose 6% and cancellations fell, but incentives cut home sale gross margin to 25.0% from 27.0%, sending EPS down 18% to $2.48 on 8% fewer closings.
Revenue
$4.0B
-9.6% YoY
Net income
$472M
-22.4% YoY
Diluted EPS
$2.48
-18.2% YoY
Operating margin
15.6%
Overview
PulteGroup, one of the largest US homebuilders (brands include Centex, Pulte Homes and Del Webb), sold more homes in the second quarter of 2026 than a year earlier, but delivered fewer and earned less on each one. Net income fell 22% to $472 million and diluted earnings per share fell 18% to $2.48, from $3.03. The gap between those two declines comes from buybacks: the diluted share count was 5% lower than a year ago.
The quarter has two stories pulling in opposite directions. Demand indicators improved: net new orders (signed contracts, net of cancellations) rose 6% to 7,536 homes, and the cancellation rate fell to 13% from 15%. Profitability kept shrinking: home sale gross margin dropped to 25.0% from 27.0%, because the company is paying up for incentives such as mortgage-rate buydowns while its land and development costs rise. The one bright spot on margin is direction: 25.0% is up from 24.4% in Q1 2026, the first sequential improvement after, in the 10-Q's words, "sequential quarterly declines since the beginning of 2025."
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue
$3,983M
$4,404M
-9.6%
Home sale revenue
$3,807M
$4,268M
-10.8%
Home sale gross margin
25.0%
27.0%
-2.0 pts
SG&A as % of home sale revenue
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Pre-tax margin (income before taxes ÷ total revenue)
15.6%
18.3%
-2.7 pts
Net income
$472M
$608M
-22.4%
Diluted EPS
$2.48
$3.03
-18.2%
Closings (homes delivered)
6,997
7,639
-8.4%
Average selling price of closed homes
$544K
$559K
-2.7%
Net new orders (homes)
7,536
7,083
+6.4%
Net new orders ($)
$4,084M
$3,888M
+5.1%
Backlog (homes, June 30)
10,966
10,779
+1.7%
Backlog value (June 30)
$6,805M
$6,843M
-0.6%
Cancellation rate
13%
15%
-2 pts
Average active communities
1,074
994
+8.0%
PulteGroup doesn't report an "operating income" line, so pre-tax margin is used here as the closest equivalent measure of overall profitability.
Why revenue fell: fewer deliveries, slightly cheaper homes
A homebuilder books revenue when a home closes (the buyer takes title), not when the contract is signed. So this quarter's revenue largely reflects orders signed months earlier. The 10-Q attributes the 8% drop in closings "primarily" to "a weaker order backlog entering the year," partly offset by more communities and faster build times. The 3% lower average selling price is put down to "product and geographic mix, combined with efforts to reduce our level of spec inventory" — spec homes being houses built before a buyer signs, which the company has been discounting to clear.
The declines were uneven by region:
Region
Q2 2026 closings
Q2 2025 closings
Change
Q2 2026 orders
Q2 2025 orders
Change
Northeast
331
451
-27%
399
384
+4%
Southeast
1,370
1,402
-2%
1,442
1,405
+3%
Florida
1,875
1,882
-0.4%
2,115
1,773
+19%
Midwest
1,173
1,272
-8%
1,409
1,272
+11%
Texas
1,121
1,218
-8%
1,053
1,042
+1%
West
1,127
1,414
-20%
1,118
1,207
-7%
Total
6,997
7,639
-8%
7,536
7,083
+6%
Florida and the Midwest drove the order gain; the West is the weak spot, with both closings (-20%) and orders (-7%) down and segment pre-tax income down 56%. Florida is now PulteGroup's largest region by both orders and backlog (3,178 homes), and its segment pre-tax income was flat year on year — the steadiest of the six regions.
Margins: buying demand with incentives
Home sale gross margin — the share of each home's sale price left after the cost of the land, materials and construction — fell 2 points to 25.0%. On $3.8 billion of home sales, that gap alone is worth roughly $76 million of gross profit. The 10-Q gives the reasons: "pricing actions, including elevated sales incentives, and increased land acquisition and development costs," and, for the first half, "efforts to reduce completed spec inventory." The incentives are specific: discounts on spec homes, help with closing costs, and mortgage interest rate buydowns (the builder pays to lower the buyer's mortgage rate).
This is the core trade-off of the quarter. Management says outright that "these pricing actions contributed to a 6% increase in net new orders in units, but lower average selling prices and gross margins." Orders are up partly because PulteGroup is making homes cheaper to buy and finance, and that cost shows up in margin. More communities open for sale (+8%) also helped.
Overhead also weighed on profitability. SG&A (selling, general and administrative costs) fell 2% in dollars to $383 million, helped by lower liability insurance costs, but because revenue fell faster, SG&A rose to 10.1% of home sale revenue from 9.1%.
Land-related charges (write-downs on land and walked-away option deposits) were modest at $16.7 million, versus $18.4 million a year ago, so the margin decline is not a write-down story.
Backlog and what it implies for the second half
The backlog — homes under contract but not yet delivered — is the best guide to near-term revenue. It ended June at 10,966 homes, up 2%, but its dollar value slipped 1% to $6.8 billion. That means the average home in backlog is worth about $621,000 versus about $635,000 a year ago (our calculation from the reported unit and dollar figures), so the lower selling prices already visible in closings are baked into the homes still to be delivered.
Put simply: unit deliveries in the second half should compare better with last year than the first half did, because the backlog is now larger than a year ago (unlike the weaker backlog entering 2026). But revenue per home is still trending down, and management expects incentives and land costs "to continue to impact our gross margins over the near term."
Balance sheet, cash and buybacks
Buybacks: 3.1 million shares repurchased in Q2 for $373 million (average $119.42 per share); $681 million year to date, about 3% of shares outstanding. The quarterly dividend was raised 18% to $0.26 in January.
Leverage: debt-to-capital (notes payable ÷ notes payable plus equity) was 12.3%, up from 11.2% at year-end; net of $1.4 billion of cash it was 3.3%. PulteGroup issued $800 million of new senior notes in February at lower rates than the $589 million of older notes it repaid or redeemed.
Cash flow: operating cash flow for the first half was $177 million, down from $422 million, mainly because inventory (land and homes under construction) grew by $807 million. Cash and equivalents fell to $1.34 billion from $1.98 billion at year-end, as buybacks and dividends exceeded cash generation.
Land: 228,241 lots controlled, 55% of them via options rather than owned outright (57% at year-end). Options let the builder walk away from land if a market weakens; the 10-Q says management has "made decisions to walk away from a number of land option agreements."
Financial services
The mortgage and title business earned $37 million before tax, down from $43 million, reflecting fewer homes closed. Its capture rate — the share of PulteGroup buyers who use its in-house mortgage lender — was 85%, unchanged. That high capture rate is what makes rate buydowns practical: the company controls the financing it is subsidizing.
First-half view
For the six months to June 30, total revenue fell 10.9% to $7.39 billion, net income fell 27.6% to $819 million, and diluted EPS fell 23.8% to $4.27. Home sale gross margin was 24.7% versus 27.2%. Q2 was better than Q1 on margin, orders and pre-tax profit, which is why the second-quarter declines look smaller than the half-year ones.
Takeaway: PulteGroup is trading margin for volume — orders rose 6% and cancellations fell, but only with elevated incentives that cut home sale gross margin to 25.0% from 27.0%. The small sequential margin gain from Q1 (24.4%) is the number to watch: if it holds while orders keep growing, earnings are near the bottom; if incentives have to rise again to keep orders coming, they are not.
Outlook
The earnings release and 10-Q give no numerical guidance for the rest of 2026. Management's written view is cautious: it expects buyers to "continue to face affordability challenges," sales incentives "to remain elevated," and land and development costs to keep pressuring margins, while the CEO noted in the release "early signs that conditions may be stabilizing in select geographies." Operationally it is keeping flexibility — heavy use of land options, fewer spec homes (homes in production were 6% lower than a year ago), and overhead adjusted to demand.
Our read: the larger backlog and 8% higher community count support a better delivery comparison in the second half than the first, but with backlog value per home falling and incentives staying high, a return to 2025's 27% gross margin looks unlikely this year. Earnings per share will keep getting help from buybacks, which is why EPS has been falling more slowly than net income. PulteGroup's third-quarter results are scheduled for October 22, 2026.