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Item 2. Management’s Discussion and Analysis

2026-10-22 compared with 2026-07-22 · 149 added, 144 removed, 359 unchanged (45% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations are provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025.

The following discussion and analysis of our financial condition and results of operations is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025.

The following is a summary of our operating results by line of business ($000's omitted, except per share data):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2025 2026 2025

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Diluted earnings per share $ 2.53 $ 2.96 $ 6.79 $ 8.55

Demand conditions remained challenging through the second quarter of 2026 as the result of elevated mortgage interest rates, higher housing costs, and general economic uncertainty.

Volatility in geopolitical conditions, in part due to tensions in the Middle East, has also negatively impacted inflation and interest rates, further weakening consumer confidence.

We have continued responding to these conditions by adjusting production cadence and sales prices where necessary and focusing sales incentives on discounts on spec inventory (houses without customer orders), closing cost incentives, and mortgage interest rate buydowns.

These pricing actions contributed to a 6% increase in net new orders in units, but lower average selling prices and gross margins, during the second quarter of 2026 compared to the prior year period.

Closings decreased 8% in the second quarter of 2026 compared to the prior year period primarily due to a lower order backlog entering 2026 compared to 2025.

Demand conditions further weakened during the third quarter of 2026.

Elevated mortgage rates, which increased sharply during the third quarter of 2026, most notably during September, continue to pressure affordability and consumer demand.

These conditions, together with higher housing costs, broader economic uncertainty, and volatility in geopolitical conditions, in part due to tensions in the Middle East, have also negatively impacted inflation, interest rates, and consumer confidence.

We have continued responding to these conditions by adjusting production cadence and sales prices where necessary and focusing sales incentives on discounts, closing cost incentives, and mortgage interest rate buydowns.

We have also continued to manage our spec inventory levels, leveraging sales incentives as needed.

Despite these pricing actions, net new orders in units decreased 6% compared to the prior year period.

Closings decreased 9% in the third quarter of 2026, while average selling prices decreased 1%.

We expect that many homebuyers will continue to face affordability challenges.

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Due to the length of our land development and construction cycle times, there is a lag between when such cost changes occur and when they impact our operating results.

Our gross margin from home sales decreased to 25.0% in the second quarter of 2026 versus 27.0% in the second quarter of 2025, but increased from 24.4% in the first quarter of 2026 after sequential quarterly declines since the beginning of 2025.

These decreases since 2025 are primarily due to the aforementioned higher land costs, pricing actions, and elevated sales incentives in response to buyer affordability challenges and reducing our mix of spec inventory.

Our gross margin decreased to 24.8% in the third quarter of 2026 versus 26.2% in the third quarter of 2025, and 25.0% in the second quarter of 2026.

Although elevated mortgage interest rates and volatile macroeconomic and geopolitical conditions may persist for some time, we believe the demographics supporting housing demand remain favorable over the long term.

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– Updating the underwriting for our land option contracts prior to buying additional land, and we have made decisions to walk away from a number of land option agreements;

– Working with our trade partners to update the costs for materials, labor, and services to reflect changes in market conditions;

– Working with our vendors to update the costs for materials, labor, and services to reflect changes in market conditions;

– Adjusting our overhead cost structure as necessary to align with demand;

– Rebalancing our mix of spec versus sold home inventory to continue to service buyers seeking to close within 30 to 90 days while increasing our backlog of build-to-order homes;

– Maintaining a focus on shareholder return through share buybacks and dividends, including $681.2 million of share repurchases in the first six months of 2026 and an 18% increase in our quarterly dividends from $0.22 to $0.26 per share effective with our January 2026 dividend payment;

– Opportunistically extending and expanding our revolving credit facility while also issuing $800.0 million of senior notes at lower interest rates than the $589.1 million of senior notes repaid and redeemed in the first three months of 2026;

– Maintaining a focus on shareholder return through share buybacks and dividends, including $1.0 billion of share repurchases in the first nine months of 2026 and an 18% increase in our quarterly dividends from $0.22 to $0.26 per share effective with our January 2026 dividend payment;

– Maintaining ample liquidity.

We believe our strategic approach with respect to balancing sales price with sales pace, including actions taken related to sales incentives and our production cadence, will enable us to meet consumer demand at the selling prices necessary to turn our inventory, maintain market share, and generate healthy returns.

inventory, maintain market share, and generate healthy returns.

We remain confident in our ability to navigate the future environment and to position the Company to take advantage of opportunities as they arise and support future growth while maintaining profitability and financial strength.

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The following presents selected financial information for our Homebuilding operations ($000’s omitted):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2026 vs.

8 unchanged sentences

expenses ("SG&A") (397,198) (1) % (400,681) (1,160,497) (2) % (1,184,472)

Equity income (loss) from unconsolidated

entities, net

Equity income (loss) from unconsolidated entities, net (2,772) (b) 2,422 959 (b) 2,083

Other income, net (d)

19,700 (b) 1,755 30,366 (b) 7,110

Other income (expense), net 3,921 (b) (1,006) 10,666 (b) 5,355

Income before income taxes $ 579,648 (20) % $ 723,430 $ 1,601,525 (25) % $ 2,133,069

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Average active communities 1,077 7 % 1,002 1,064 8 % 986

Backlog at June 30:

Backlog at September 30:

Units 10,298 4 % 9,888

3 unchanged sentences

(c) Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders.

(d) Includes a gain of $21.4 million in the three and nine months ended September 30, 2026 related to the divestiture of certain manufacturing assets.

Home sale revenues

Home sale revenues in the three and six months ended June 30, 2026 were lower than the prior year periods by $460.9 million and $902.6 million, respectively.

In the three months ended June 30, 2026, the 11% decrease resulted primarily from an 8% decrease in closings from the prior year period, combined with a 3% decrease in average selling price.

In the six months ended June 30, 2026 the 11% decrease resulted primarily from an 8% decrease in closings, combined with a 4% decrease in average selling price.

The decreases in closings were primarily attributable to a weaker order backlog entering the year, partially offset by a higher community count and improved production cycle times.

Average selling price during the three and six months ended June 30, 2026 decreased primarily due to product and geographic mix, combined with efforts to reduce our level of spec inventory during 2026.

Home sale revenues in the three and nine months ended September 30, 2026 were lower than the prior year periods by $389.3 million and $1.3 billion, respectively.

In the three months ended September 30, 2026, the 9% decrease resulted primarily from a 9% decrease in closings from the prior year period, combined with a 1% decrease in average selling price.

In the nine months ended September 30, 2026, the 11% decrease resulted primarily from an 8% decrease in closings, combined with a 3% decrease in average selling price.

The decreases in closings were primarily attributable to the more challenging demand conditions, partially offset by a higher community count and improved production cycle times.

Average selling price during the three and nine months ended September 30, 2026 decreased due to product and geographic mix, elevated sales incentives, and efforts to reduce our level of spec inventory during 2026.

Home sale gross margins

Home sale gross margins were 25.0% and 24.7% in the three and six months ended June 30, 2026, respectively, compared with 27.0% and 27.2% in the three and six months ended June 30, 2025, respectively.

Home sale gross margins were 24.8% and 24.7% in the three and nine months ended September 30, 2026, respectively, compared with 26.2% and 26.9% in the three and nine months ended September 30, 2025, respectively.

The decreases in home sale gross margins were primarily attributable to the aforementioned pricing actions, including elevated sales incentives, and increased land acquisition and development costs.

We expect these factors to continue to impact our gross margins over the near term.

Gross margins for the first six months of 2026 were also unfavorably impacted by our efforts to reduce completed spec inventory to more appropriate levels.

Gross margins for the first nine months of 2026 were also unfavorably impacted by our efforts to reduce completed spec inventory to more appropriate levels.

Land sale and other revenues

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Land sale and other revenues and their related gains or losses vary between periods, depending on the timing of land sales and our strategic operating decisions.

Land sale and other revenues contributed income of $10.8 million and $13.0 million for the three and six months ended June 30, 2026, respectively, compared with income of $4.1 million and $5.7 million for the three and six months ended June 30, 2025, respectively.

SG&A as a percentage of home sale revenues was 10.1% and 10.7% in the three and six months ended June 30, 2026, respectively, compared with 9.1% and 9.8% for the three and six months ended June 30, 2025, respectively.

The gross dollar amount of our SG&A decreased $7.5 million, or 2%, for the three months ended June 30, 2026 compared with the prior year period, and decreased $20.5 million, or 3%, for the six months ended June 30, 2026 compared with the prior year period.

The decrease in gross dollars for the three and six months ended June 30, 2026 was primarily attributable to lower variable costs associated with the decrease in closings along with lower liability insurance costs.

Land sale and other revenues contributed income of $2.7 million and $15.7 million for the three and nine months ended September 30, 2026, respectively, compared with income of $5.1 million and $10.8 million for the three and nine months ended September 30, 2025, respectively.

SG&A as a percentage of home sale revenues was 10.3% and 10.6% in the three and nine months ended September 30, 2026, respectively, compared with 9.4% and 9.7% for the three and nine months ended September 30, 2025, respectively.

The gross dollar amount of our SG&A decreased $3.5 million, or 1%, for the three months ended September 30, 2026 compared with the prior year period, and decreased $24.0 million, or 2%, for the nine months ended September 30, 2026 compared with the prior year period.

The decrease in gross dollars for the three and nine months ended September 30, 2026 was primarily attributable to lower variable costs associated with the decrease in closings along with lower liability insurance costs.

We expect to continue managing and balancing our overhead costs consistent with expected changes in the demand environment.

Other income (expense), net

Other income (expense), net includes the following ($000’s omitted):

Three Months Ended Six Months Ended

June 30, June 30,

Other income, net

Other income, net includes the following ($000’s omitted):

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2025 2026 2025

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Interest expense (140) (170) (410) (438)

Miscellaneous, net 1,517 3,199 4,231 6,126

Other income (expense), net $ 3,921 $ (1,006) $ 10,666 $ 5,355

Miscellaneous, net (a)

24,709 3,258 28,940 9,385

Other income, net $ 19,700 $ 1,755 $ 30,366 $ 7,110

(a) Includes a gain of $21.4 million in the three and nine months ended September 30, 2026 related to the divestiture of certain manufacturing assets.

Net new orders

Net new orders in units increased 6% while net new orders in dollars increased 5% in the three months ended June 30, 2026, as compared with the prior year period.

Net new orders in units increased 5% while net new orders in dollars increased 3% in the six months ended June 30, 2026, as compared with the prior year period.

The increased net new order volume and dollars in the three and six months ended June 30, 2026 over the comparable prior year periods was primarily attributable to higher order volumes in our Florida and Midwest segments, partially offset by lower volumes in our West segment.

Cancellation rates (canceled orders for the period divided by gross new orders for the period) were 13% for both the three and six months ended June 30, 2026, and 15% and 14% for the three and six months ended June 30, 2025, respectively.

Ending backlog dollars, which represent orders for homes that have not yet closed, decreased 1% at June 30, 2026 compared with June 30, 2025.

Net new orders in units decreased 6% while net new orders in dollars decreased 4% in the three months ended September 30, 2026, as compared with the prior year period.

Net new orders in units increased 1% while net new orders in dollars increased 1% in the nine months ended September 30, 2026, as compared with the prior year period.

The decreased net new order volume and dollars in the three months ended September 30, 2026 was primarily attributable to our West, Southeast, and Texas segments, partially offset by higher volumes in our Florida segment.

The increased net new order volume and dollars in the nine months ended September 30, 2026 over the comparable prior year period was primarily attributable to higher order volumes in our Florida and Midwest segments, partially offset by lower volumes in our West segment.

Cancellation rates (canceled orders for the period divided by gross new orders for the period) were 16% and 13% for the three and nine months ended September 30, 2026, respectively, and 16% and 15% for the three and nine months ended September 30, 2025, respectively.

Ending backlog dollars, which represent orders for homes that have not yet closed, increased 3% at September 30, 2026 compared with September 30, 2025.

Homes in production

The following is a summary of our homes in production:

2026 June 30,

September 30,

2026 September 30,

Sold 7,972 7,727

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Total 16,381 16,806

The number of homes in production at June 30, 2026 was 6% lower than at June 30, 2025.

The number of homes in production at September 30, 2026 was 3% lower than at September 30, 2025.

This decrease was primarily due to our focus on reducing the number of spec homes and improved production cycle times, which reduces the length of time a home remains under construction.

Controlled lots

The following is a summary of our lots under control at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

The following is a summary of our lots under control at September 30, 2026 and December 31, 2025:

September 30, 2026 December 31, 2025

Owned Optioned Controlled Owned Optioned Controlled

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We have also continued to seek to maintain a high percentage of our lots that are controlled via land option agreements as such contracts enable us to defer acquiring portions of properties owned by third parties or unconsolidated entities until we have determined whether and when to exercise our option, which reduces our financial risks associated with long-term land holdings.

The remaining purchase price under our land option agreements totaled $9.7 billion at June 30, 2026.

The remaining purchase price under our land option agreements totaled $9.4 billion at September 30, 2026.

Homebuilding Segment Operations

As of June 30, 2026, we conducted our operations in 48 markets located throughout 26 states.

As of September 30, 2026, we conducted our operations in 48 markets located throughout 26 states.

For reporting purposes, our Homebuilding operations are aggregated into six reportable segments:

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Operating Data by Segment ($000's omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2026 vs.

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(c) Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the other segments.

Other homebuilding also includes a gain of $21.4 million in the three and nine months ended September 30, 2026 related to the divestiture of certain manufacturing assets.

Operating Data by Segment ($000's omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2026 vs.

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Operating Data by Segment ($000's omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2025 2026 2026 vs.

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($000’s omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2025 2026 2025

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Other homebuilding consists primarily of write-offs of capitalized interest related to such land-related charges.

For the second quarter of 2026, Northeast home sale revenues decreased 33% when compared with the prior year period due to a 27% decrease in closings combined with an 8% decrease in average selling price.

For the third quarter of 2026, Northeast home sale revenues decreased 16% when compared with the prior year period due to an 11% decrease in closings combined with a 6% decrease in average selling price.

The decrease in closings and average selling price occurred across the majority of markets.

Income before income taxes decreased 31%, primarily due to lower revenues and gross margins across the majority of markets.

Net new orders increased across the majority of markets.

For the six months ended June 30, 2026, Northeast home sale revenues decreased 31% when compared with the prior year period due to a 25% decrease in closings combined with an 8% decrease in average selling price.

The decrease in closings and average selling price occurred across the majority of markets.

The decrease in net new orders primarily occurred in our Mid-Atlantic operations.

For the nine months ended September 30, 2026, Northeast home sale revenues decreased 26% when compared with the prior year period due to a 20% decrease in closings combined with a 7% decrease in average selling price.

The decrease in closings occurred across all markets, while the decrease in average selling price occurred across the majority of markets.

Income before income taxes decreased 47% primarily due to lower revenues and gross margins across all markets.

The decrease in net new orders primarily occurred in our Mid-Atlantic operations.

For the third quarter of 2026, Southeast home sale revenues decreased 12% when compared with the prior year period due to a 10% decrease in closings combined with a 2% decrease in average selling price.

The decrease in closings occurred across all markets, while the decrease in average selling price was mixed among markets.

Income before income taxes decreased 27%, primarily due to lower revenues and gross margins across the majority of markets.

Net new orders increased across all markets.

For the second quarter of 2026, Southeast home sale revenues decreased 7% when compared with the prior year period due to a 2% decrease in closings combined with a 5% decrease in average selling price.

Net new orders decreased across the majority of markets.

For the nine months ended September 30, 2026, Southeast home sale revenues decreased 7% when compared with the prior year period due to a 3% decrease in closings combined with a 4% decrease in average selling price.

The decrease in closings occurred across the majority of markets, while the decrease in average selling price was mixed among markets.

Income before income taxes decreased 27% primarily due to lower revenues across the majority of markets and lower gross margins across all markets.

The increase in net new orders was mixed among markets.

For the six months ended June 30, 2026, Southeast home sale revenues decreased 5% when compared with the prior year period due to a 5% decrease in average selling price partially offset by a slight increase in closings.

The decrease in average selling price and increase in closings was mixed among markets.

Income before income taxes decreased 26% primarily due to lower revenues across the majority of markets and lower gross margins across all.

The increase in net new orders was mixed among markets.

For the second quarter of 2026, Florida home sale revenues increased 1% when compared with the prior year period primarily due to a 1% increase in average selling price partially offset by a slight decrease in closings.

The increase in average selling price and decrease in closings occurred across the majority of markets.

Income before income taxes was in line with the comparable prior year period.

Net new orders increased across all markets.

For the six months ended June 30, 2026, Florida home sale revenues decreased 2% when compared with the prior year period due to a 3% decrease in the average selling price partially offset by a 1% increase in closings.

The decrease in average selling price and increase in closings occurred across the majority of markets.

The decrease in net new orders was mixed among markets.

For the third quarter of 2026, Florida home sale revenues increased slightly when compared with the prior year period primarily due to a 2% increase in average selling price partially offset by a 1% decrease in closings.

The increase in average selling price occurred across all markets, while the decrease in closings occurred across the majority of markets.

Income before income taxes decreased 3% primarily due to lower gross margins across the majority of markets.

Net new orders increased across the majority of markets.

For the nine months ended September 30, 2026, Florida home sale revenues decreased 1% when compared with the prior year period due to a 2% decrease in the average selling price partially offset by a slight increase in closings.

The decrease in average selling price and increase in closings occurred across the majority of markets.

Income before income taxes decreased 10% primarily due to lower revenues and closings in our Southwest Florida operations, combined with lower gross margins across all markets.

The increase in net new orders occurred across all markets.

For the second quarter of 2026, Midwest home sale revenues decreased 8% when compared with the prior year period due to an 8% decrease in closings combined with a slight decrease in average selling price.

The decrease in closings occurred across the majority of markets while the decrease in average selling price was mixed among markets.

For the third quarter of 2026, Midwest home sale revenues decreased 8% when compared with the prior year period due to a 9% decrease in closings partially offset by a 1% increase in average selling price.

The decrease in closings and increase in average selling price occurred across the majority of markets.

Income before income taxes decreased 11% primarily due to lower revenues.

The increase in net new orders occurred across the majority of markets.

For the six months ended June 30, 2026, Midwest home sale revenues decreased 9% when compared with the prior year period due to a 9% decrease in closings partially offset by a slight increase in average selling price.

The decrease in closings and the increase in average selling price occurred across the majority of markets.

The decrease in net new orders was mixed among markets.

For the nine months ended September 30, 2026, Midwest home sale revenues decreased 8% when compared with the prior year period due to a 9% decrease in closings partially offset by a 1% increase in average selling price.

The decrease in closings and increase in average selling price occurred across the majority of markets.

Income before income taxes decreased 13% primarily due to lower revenues across the majority of markets.

The increase in net new orders was mixed among markets.

For the second quarter of 2026, Texas home sale revenues decreased 12% when compared with the prior year period due to an 8% decrease in closings combined with a 4% decrease in average selling price.

The decrease in closings and average selling price occurred across the majority of markets.

Income before income taxes decreased 21% primarily due to lower revenues across the majority of markets, and lower gross margins, which was mixed among markets.

The increase in net new orders was mixed among markets.

For the six months ended June 30, 2026, Texas home sale revenues decreased 17% when compared with the prior year period due to a 12% decrease in closings combined with a 6% decrease in average selling price.

For the third quarter of 2026, Texas home sale revenues decreased 12% when compared with the prior year period due to an 8% decrease in closings combined with a 4% decrease in average selling price.

The decrease in closings occurred across all markets, while the decrease in average selling price was mixed across markets.

Income before income taxes decreased 63% primarily due to lower revenues across all markets, and lower gross margins primarily in our Dallas and Central Texas operations.

The decrease in net new orders occurred across all markets.

For the nine months ended September 30, 2026, Texas home sale revenues decreased 15% when compared with the prior year period due to an 11% decrease in closings combined with a 5% decrease in average selling price.

The decrease in closings occurred across all markets, while the decrease in average selling price occurred across the majority of markets.

Income before income taxes decreased 39% primarily due to lower revenues and gross margins across all markets.

The decrease in net new orders was mixed among markets.

For the second quarter of 2026, West home sale revenues decreased 20% when compared with the prior year period due to a 20% decrease in closings combined with a slight decrease in average selling price.

The decrease in closings and average selling price occurred across the majority of markets.

Income before income taxes decreased 46% primarily due to lower revenues across all markets, and lower gross margins primarily in our Dallas and Central Texas operations.

The decrease in net new orders occurred across all markets.

For the third quarter of 2026, West home sale revenues decreased 16% when compared with the prior year period due to an 18% decrease in closings partially offset by a 2% increase in average selling price.

The decrease in closings occurred across the majority of markets while the increase in average selling price was primarily due to closings mix in our California markets.

Income before income taxes decreased 57% primarily due to lower revenues and gross margins across the majority of markets.

The decrease in net new orders was primarily attributable to our Las Vegas and Arizona operations.

For the six months ended June 30, 2026, West home sale revenues decreased 19% when compared with the prior year period due to an 18% decrease in closings combined with a 1% decrease in average selling price.

The decrease in closings and average selling price occurred across the majority of markets.

The decrease in net new orders occurred across the majority of markets.

For the nine months ended September 30, 2026, West home sale revenues decreased 18% when compared with the prior year period due to an 18% decrease in closings, while average selling price was in line with the prior year period.

The decrease in closings occurred across the majority of markets.

Income before income taxes decreased 54% primarily due to lower revenues and gross margins across the majority of markets.

The decrease in net new orders was primarily attributable to our Las Vegas and Arizona operations.

The decrease in net new orders occurred across the majority of markets.

Financial Services Operations

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Operating as a captive business model primarily targeted to support our Homebuilding operations, the business levels of our Financial Services operations are highly correlated to Homebuilding, as Homebuilding customers continue to account for substantially all of its business.

We believe that our mortgage capture rate, which represents loan originations from our Homebuilding operations as a percentage of total loan opportunities from our Homebuilding operations, excluding cash closings, is an important metric in

evaluating the effectiveness of our captive mortgage business model.

The following tables present selected financial information for our Financial Services operations ($000's omitted):

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2026 2026 vs.

10 unchanged sentences

Principal $ 1,920,110 (7) % $ 2,054,441 $ 5,599,429 (8) % $ 6,085,214

Six Months Ended

Nine Months Ended

September 30,

Supplemental data:

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Total funded originations 100 % 100 %

Total Financial Services revenues for the three and six months ended June 30, 2026 decreased 4% and 12%, respectively, compared with the comparable prior year periods, reflective of the lower homebuilding volume.

Insurance agency commissions reflect the evolving environment for home insurance as carriers adjust their premiums, geographic markets, and product coverages.

Total Financial Services revenues decreased 7% for the nine months ended September 30, 2026, compared with the comparable prior year period, primarily due to lower Homebuilding volumes.

Income before income taxes

Income before income taxes in the three and six months ended June 30, 2026 decreased 13% and 36%, respectively, compared with the comparable prior year periods due to lower revenues combined with higher expenses.

Our effective tax rate for the three and six months ended June 30, 2026 was 24.2% and 23.6%, respectively, compared with 24.6% and 24.0% for the comparable prior year periods.

Income before income taxes decreased 22% for the nine months ended September 30, 2026, compared with the comparable prior year period, primarily due to lower Homebuilding volumes.

Our effective tax rate for the three and nine months ended September 30, 2026 was 23.9% and 23.7%, respectively, compared with 23.7% and 23.9% for the comparable prior year periods.

Our effective tax rate for each of these periods differs from the federal statutory rate primarily due to state income tax expense and federal tax credits.

Our effective tax rate for the six months ended June 30, 2026 and 2025 also includes benefits from stock-based compensation.

Our effective tax rate for the nine months ended September 30, 2026 and 2025 also includes benefits from stock-based compensation.

Liquidity and Capital Resources

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We routinely monitor current and expected operational requirements and financial market conditions to evaluate accessing available financing sources, including revolving bank credit and securities offerings.

At June 30, 2026, we had unrestricted cash and equivalents of $1.3 billion, restricted cash balances of $41.6 million, and $1.4 billion available under our Revolving Credit Facility.

Our ratio of debt-to-total capitalization, excluding our Financial Services debt, was 12.3% at June 30, 2026, compared with 11.2% at December 31, 2025.

At September 30, 2026, we had unrestricted cash and equivalents of $1.4 billion, restricted cash balances of $38.1 million, and $1.4 billion available under our Revolving Credit Facility.

Our ratio of debt-to-total capitalization, excluding our Financial Services debt, was 12.1% at September 30, 2026, compared with 11.2% at December 31, 2025.

We follow a diversified investment approach for our cash and equivalents by maintaining such funds with a portfolio of banks within our group of relationship banks in high quality, highly liquid, short-term deposits and investments, which helps mitigate banking concentration risk.

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We plan to continue our dividend payments and repurchases of common stock.

We need to repay or refinance Pulte Mortgage's master repurchase agreement with third-party lenders (as amended, the "Repurchase Agreement") prior to or at the time it comes due in August 2026.

We need to repay or refinance Pulte Mortgage's master repurchase agreement with third-party lenders (the "Repurchase Agreement") prior to or at the time it comes due in August 2027.

While we intend to refinance the Repurchase Agreement, there can be no assurances that the Repurchase Agreement can be renewed or replaced on commercially reasonable terms upon its expiration.

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Unsecured senior notes

We had $1.8 billion and $1.6 billion of unsecured senior notes outstanding at June 30, 2026 and December 31, 2025, respectively.

As of June 30, 2026, no repayments are due until March 2031.

We had $1.8 billion and $1.6 billion of unsecured senior notes outstanding at September 30, 2026 and December 31, 2025, respectively.

As of September 30, 2026, no repayments are due until March 2031.

In February 2026, we issued $800.0 million of unsecured senior notes, consisting of $400.0 million of 4.250% senior notes scheduled to mature on March 1, 2031, and $400.0 million of 4.900% senior notes scheduled to mature on March 1, 2036.

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Other notes payable

Other notes payable include non-recourse and limited recourse secured notes with third parties that totaled $37.4 million and $47.2 million at June 30, 2026 and December 31, 2025, respectively.

Other notes payable include non-recourse and limited recourse secured notes with third parties that totaled $25.4 million and $47.2 million at September 30, 2026 and December 31, 2025, respectively.

These notes have maturities ranging up to four years, are secured by the applicable land positions to which they relate, and generally have no recourse to other assets.

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The Revolving Credit Facility contains financial covenants that require us to maintain a minimum Tangible Net Worth and a maximum Debt-to-Capitalization Ratio (as each term is defined in the Revolving Credit Facility).

As of June 30, 2026, we were in compliance with all covenants and requirements of the Revolving Credit Facility.

As of September 30, 2026, we were in compliance with all covenants and requirements of the Revolving Credit Facility.

Outstanding balances under the Revolving Credit Facility are guaranteed by certain of our wholly-owned subsidiaries.

At June 30, 2026, we had no borrowings outstanding, $343.2 million of letters of credit issued, and $1.4 billion of remaining capacity under the Revolving Credit Facility.

At September 30, 2026, we had no borrowings outstanding, $368.3 million of letters of credit issued, and $1.4 billion of remaining capacity under the Revolving Credit Facility.

At December 31, 2025, we had no borrowings outstanding, $357.1 million of letters of credit issued, and $892.9 million of remaining capacity under the Original Revolving Credit Facility.

Joint venture debt

At June 30, 2026, aggregate outstanding debt of unconsolidated joint ventures was $45.1 million.

At September 30, 2026, aggregate outstanding debt of unconsolidated joint ventures was $64.6 million.

Financial Services debt

Pulte Mortgage maintains a master repurchase agreement with third-party lenders (as amended, the "Repurchase Agreement") that matures on August 12, 2026.

The maximum aggregate commitment under the Repurchase Agreement was $625.0 million at June 30, 2026, which continues until maturity.

The Repurchase Agreement also contains an accordion feature that could increase the commitment by $50.0 million above its active commitment level.

Pulte Mortgage entered into a master repurchase agreement (the "Repurchase Agreement") in August 2026 with third-party lenders that matures on August 10, 2027.

The Repurchase Agreement replaced a substantially similar agreement that previously existed with different lenders (the "Original Repurchase Agreement").

The maximum aggregate commitment under the Repurchase Agreement was $625.0 million at September 30, 2026, which continues until maturity.

Borrowings under the Repurchase Agreement are secured by residential mortgage loans available-for-sale.

The Repurchase Agreement contains various affirmative and negative covenants applicable to Pulte Mortgage, including quantitative thresholds related to net worth, net income, and liquidity.

At June 30, 2026, Pulte Mortgage had $477.9 million outstanding at a weighted-average interest rate of 5.42% and $147.1 million of remaining capacity under the Repurchase Agreement.

At December 31, 2025, Pulte Mortgage had $532.3 million outstanding at a weighted-average interest rate of 5.51% and $92.7 million of remaining capacity under the Repurchase Agreement.

At September 30, 2026, Pulte Mortgage had $383.2 million outstanding at a weighted-average interest rate of 5.61% and $241.8 million of remaining capacity under the Repurchase Agreement.

At December 31, 2025, Pulte Mortgage had $532.3 million outstanding at a weighted-average interest rate of 5.51% and $92.7 million of remaining capacity under the Original Repurchase Agreement.

Pulte Mortgage was in compliance with all covenants and requirements as of such dates.

Dividends and share repurchase program

In the six months ended June 30, 2026, we declared cash dividends totaling $99.5 million and repurchased 5.5 million shares under our share repurchase authorization for $681.2 million.

In the six months ended June 30, 2025, we declared cash dividends totaling $88.7 million and repurchased 5.8 million shares under our share repurchase authorization for $600.0 million.

In the nine months ended September 30, 2026, we declared cash dividends totaling $148.1 million and repurchased 8.4 million shares under our share repurchase authorization for $1.0 billion.

In the nine months ended September 30, 2025, we declared cash dividends totaling $132.2 million and repurchased 8.2 million shares under our share repurchase authorization for $900.0 million.

On January 29, 2025, the Board of Directors increased our share repurchase authorization by $1.5 billion, which was publicly announced on January 30, 2025.

On April 22, 2026, the Board of Directors approved an additional increase to our share repurchase authorization of $1.5 billion, which was publicly announced on April 23, 2026.

At June 30, 2026, we had remaining authorization to repurchase $1.8 billion of common shares.

At September 30, 2026, we had remaining authorization to repurchase $1.5 billion of common shares.

Contractual Obligations

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These obligations impact our short-term and long-term liquidity and capital resource needs.

Certain contractual obligations are reflected on the Condensed Consolidated Balance Sheet as of June 30, 2026, while others are considered future commitments.

Certain contractual obligations are reflected on the Condensed Consolidated Balance Sheet as of September 30, 2026, while others are considered future commitments.

Our contractual obligations primarily consist of long-term debt and related interest payments, purchase obligations related to expected acquisitions and development of land, house construction costs, operating leases, and obligations under our various compensation and benefit plans.

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If the obligations related to a project or program are ongoing, annual extensions of the letters of credit are typically granted on a year-to-year basis.

At June 30, 2026, we had outstanding letters of credit totaling $343.2 million.

At September 30, 2026, we had outstanding letters of credit totaling $368.3 million.

Our surety bonds generally do not have stated expiration dates;

rather, we are released from the bonds as the contractual performance is completed.

These bonds, which approximated $3.1 billion at June 30, 2026, are typically outstanding over a period of approximately three to five years.

These bonds, which approximated $3.0 billion at September 30, 2026, are typically outstanding over a period of approximately three to five years.

Because significant construction and development work has been performed related to projects that have not yet received final acceptance by the respective counterparties, the aggregate amount of surety bonds outstanding is in excess of the projected cost of the remaining work to be performed.

In the ordinary course of business, we enter into land option agreements in order to procure land for the construction of houses in the future.

At June 30, 2026, these agreements had an aggregate remaining purchase price of $9.7 billion.

At September 30, 2026, these agreements had an aggregate remaining purchase price of $9.4 billion.

Pursuant to these land option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices.

At June 30, 2026, outstanding deposits totaled $717.4 million, of which $15.8 million is refundable.

For further information regarding our primary obligations, refer to Note 4 and Note 8 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on 10-Q for amounts outstanding as of June 30, 2026 related to debt and commitments and contingencies, respectively.

At September 30, 2026, outstanding deposits totaled $686.3 million, of which $15.1 million is refundable.

For further information regarding our primary obligations, refer to Note 4 and Note 8 to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for amounts outstanding as of September 30, 2026 related to debt and commitments and contingencies, respectively.

Operating activities

Net cash provided by operating activities in the six months ended June 30, 2026 was $176.8 million.

Net cash provided by operating activities in the nine months ended September 30, 2026 was $637.0 million.

Generally, the primary drivers of our cash flow from operations are profitability and changes in the levels of inventory and residential mortgage loans available-for-sale, each of which experience seasonal fluctuations.

The cash inflows from our operations for the six months ended June 30, 2026 were primarily due to net income of $819.0 million and a net decrease in residential mortgage loans available-for-sale of $63.9 million, partially offset by a net increase in inventories of $807.3 million, which was primarily attributable to land acquisition, development, and house spend to support ongoing operations.

Net cash provided by operating activities in the six months ended June 30, 2025 was $421.7 million.

The cash inflows from our operations for the six months ended June 30, 2025 were primarily due to net income of $1.1 billion, partially offset by a net increase in inventories of $533.0 million, which was primarily attributable to land acquisition, development, and house spend to support expected future growth.

The cash inflows from our operations for the nine months ended September 30, 2026 were primarily due to net income of $1.3 billion and a net decrease in residential mortgage loans available-for-sale of $179.7 million, partially offset by a net increase in inventories of $1.1 billion, which was primarily attributable to land acquisition, development, and house spend to support ongoing operations.

Net cash provided by operating activities in the nine months ended September 30, 2025 was $1.1 billion.

The cash inflows from our operations for the nine months ended September 30, 2025 were primarily due to net income of $1.7 billion, partially offset by a net increase in inventories of $635.9 million, which was primarily attributable to land acquisition, development, and house spend to support expected future growth.

Investing activities

Net cash used in investing activities in the six months ended June 30, 2026 was $87.8 million.

These cash outflows primarily resulted from capital expenditures of $55.3 million related to our ongoing investments in new communities, facilities, and information technology applications, along with $40.9 million of investments in unconsolidated entities.

Net cash used in investing activities in the six months ended June 30, 2025 was $39.2 million.

Net cash used in investing activities in the nine months ended September 30, 2026 was $8.8 million.

These cash outflows primarily resulted from capital expenditures of $78.2 million related to our ongoing investments in new communities, facilities, and information technology applications, along with $45.8 million of investments in unconsolidated entities, partially offset by distributions of capital from unconsolidated entities of $21.6 million and proceeds from asset dispositions of $90.6 million.

Net cash used in investing activities in the nine months ended September 30, 2025 was $64.1 million.

These cash outflows primarily resulted from capital expenditures of $91.4 million related to our ongoing investments in new communities, facilities, and information technology applications, partially offset by distributions of capital from unconsolidated entities of $45.7 million.

Financing activities

Net cash used in financing activities in the six months ended June 30, 2026 totaled $720.5 million.

These cash outflows resulted primarily from repayments and redemptions of notes payable of $600.7 million, repurchases of 5.5 million common shares for $681.2 million under our share repurchase authorization, payments of $101.8 million in cash dividends, and net repayments of $54.4 million under the Repurchase Agreement, partially offset by $794.8 million of proceeds from debt issuance.

Net cash used in financing activities in the six months ended June 30, 2025 totaled $768.9 million.

These cash outflows resulted primarily from repurchases of 5.8 million common shares for $600.0 million under our share repurchase authorization, payments of $90.1 million in cash dividends, payments of $22.4 million related to consolidated inventory not owned, and net repayments of $28.5 million under the Repurchase Agreement.

Net cash used in financing activities in the nine months ended September 30, 2026 totaled $1.2 billion.

These cash outflows resulted primarily from repayments and redemptions of notes payable of $612.7 million, repurchases of 8.4 million common shares for $1.0 billion under our share repurchase authorization, payments of $150.8 million in cash dividends, and net repayments of $149.1 million under the Repurchase Agreement, partially offset by $794.8 million of proceeds from debt issuance.

Net cash used in financing activities in the nine months ended September 30, 2025 totaled $1.2 billion.

These cash outflows resulted primarily from repurchases of 8.2 million common shares for $900.0 million under our share repurchase authorization, payments of $133.7 million in cash dividends, payments of $33.0 million related to consolidated inventory not owned, and net repayments of $122.7 million under the Original Repurchase Agreement.

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again, we historically experience variability in our quarterly results from operations due to the seasonal nature of the homebuilding industry.

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Supplemental Guarantor Financial Information

As of June 30, 2026, PulteGroup, Inc.

As of September 30, 2026, PulteGroup, Inc.

had outstanding $1.8 billion principal amount of unsecured senior notes due at dates from March 2031 through March 2036 and no borrowings outstanding, $368.3 million of letters of credit issued, and $1.4 billion of remaining capacity under its Revolving Credit Facility.

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(b) received less than reasonably equivalent value or fair consideration in return for incurring the guarantee and, in the case of any one of the following being true at the time thereof:

• such Guarantor was insolvent or rendered insolvent by reason of the issuance of the incurrence of the guarantee;

• such Guarantor was insolvent or rendered insolvent by reason of the issuance or incurrence of the guarantee;

• the incurrence of the guarantee left such Guarantor with an unreasonably small amount of capital or assets to carry on its business;

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Summarized Balance Sheet Data

ASSETS June 30, 2026 December 31, 2025

ASSETS September 30, 2026 December 31, 2025

Cash, cash equivalents, and restricted cash $1,048,455 $1,632,196

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Total liabilities 5,107,848 4,682,755

Six Months Ended Year Ended

June 30, December 31

Nine Months Ended Year Ended

September 30, December 31

Summarized Statement of Operations Data 2026 2025

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Summarized Balance Sheet Data

ASSETS June 30, 2026 December 31, 2025

ASSETS September 30, 2026 December 31, 2025

Cash, cash equivalents, and restricted cash $1,019,989 $1,623,081

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Total liabilities 5,125,467 4,708,371

Six Months Ended Year Ended

June 30, December 31

Nine Months Ended Year Ended

September 30, December 31

Summarized Statement of Operations Data 2026 2025

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Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates in the six months ended June 30, 2026 compared with those contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025.

There have been no significant changes to our critical accounting estimates in the nine months ended September 30, 2026 compared with those contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis