PulteGroup Tacks Steady Amid Flux, Leans Into Predictability

When it comes to jockeying for position among America's biggest homebuilders, PulteGroup plays its hand differently — and deliberately.

While D.R. Horton continues to dominate on scale and starts, and Lennar calibrates for a new equilibrium of land-light leverage and factory-like production consistency, Pulte leans into predictability, margin resilience, and operational discipline. That strategy may not make it the loudest on volume or the flashiest on innovation. Still, it gives the Atlanta-based builder a distinctive edge: consistency in a business full of sudden turns.

Q3 2025 was no exception.

PulteGroup posted strong quarterly earnings on Oct. 22, with profitability metrics and an improved backlog pointing to stability going into year-end. While net new orders grew modestly, and margins ticked down slightly, Pulte’s measured approach to spec vs. build-to-order, disciplined land strategy, and customer profile allowed it to avoid many of the turbulence traps that have plagued others.

Here's how Pulte performed and what it signals about its place in the increasingly bifurcated field of large public builders.

PulteGroup’s Q3 earnings reflect a challenging homebuilding market, as declining consumer confidence negates the impact of a more positive mortgage rate environment, thus requiring homebuilders to employ more incentives to get homebuyers across the finish line. 

Pulte’s incentives as a percentage of overall sales increased last quarter, as revenues, closings, gross margins, and net new orders declined, but the earnings call reflected a more conservative approach when compared to a key competitor. 

Cautiously Employing More Incentives

Pulte’s incentives inched up from 8.7% in Q2 to 8.9% last quarter. However, that is significantly lower than Lennar’s reported incentives of 14.3%, which had increased from approximately 13% in the previous quarter. 

CEO Ryan Marshall outlined Pulte’s incentives strategy on the earnings call:

You have heard me say before that we can't be margin proud. So when operating in more difficult market conditions, our local teams understand the importance of finding the market and turning assets while not giving away price needlessly. That is the approach we continue to take as we compete for sales and work to sell through finished inventory.”

Jim Ossowski, Executive Vice President and CFO, explained that about a third of incentives were financial, while the rest are “cost-of-goods” incentives.

If we want to give you some money off in a design center, maybe if you have a finished spec inventory, you get a little bit of a discount on that. That's about two-thirds of the mix,” Ossowski explained. 

Stephen Kim, Senior Managing Director at Evercore ISI, was pleased with this strategy. 

That's great. That's not a lot, so that's encouraging that not a lot are financial,” Kim responded. 

Marshall and Ossowski both noted that the level of incentives varied across regions. While the Midwest, Northeast, and Southeast were regions of strength, markets in Texas and the West were challenging and required more homebuilder incentives. 

55+ Buyers Help Offset Pulte’s Declining Margins

The company’s strong performance among its 55+ active adult Del Webb communities helped Pulte outperform its Big 3 competitors among a key metric — gross profit margin. Pulte’s gross margin, at 26.2%, was down from 28.8% year-over-year, but also beat out the competition, compared to D.R. Horton’s 21.8% and Lennar’s 17.5%.

Pulte’s age-restricted Del Webb communities offer residents resort-style amenities, and also carry margins 400 basis points higher than entry-level Centex products and 200 basis points higher than move-up products, Marshall said during the Q2 earnings call. 

Pulte Works to Diversify its Product Mix

Del Webb accounted for 24% of Pulte’s business and increased 7% quarterly, even as overall closings were down 3%, Marshall reported. 

Other than Del Webb, Pulte’s remaining sales come from first-time buyers, down 14%, and move-up buyers, down 3%. Move-up and first-time buyers accounted for 38% each, a mix that was intentional; several years ago, move-up buyers accounted for about 45%. 

Marshall explained that his team intentionally brought down the move-up business to a “range of 35% to 38% ideally”, while first-time buyers will equate about 38% to 40% and Del Webb will account for about a quarter of the business going forward. 

According to Marshall, diversifying the product mix will strengthen the company as market dynamics change and demand drivers shift.

I think it's fair to say that home buying demand in 2025 has been more challenging than the industry was anticipating. And while it has been more challenging, I think PulteGroup's year-to-date results continue to demonstrate the importance of our diversified and balanced approach to the business.” 

Pulte also plans to leverage Del Webb’s strong margins with its new Del Webb Explore brand, which the company announced this year. While it's too early to predict margins, Pulte has high hopes for the brand, which will be marketed primarily to established yet younger buyers.

Our new Del Webb Explore brand is designed to serve today's Gen X buyers looking for the amazing luxury lifestyle but without the age restriction,” Marshall explained.

Optimizing Efficiency and Planning for Future Growth 

Marshall noted that Pulte reduced its average build time while maintaining costs at $79 per square foot, unchanged from a year ago. The company also responded to declining homebuyer demand by decreasing land spending by 5% annually.

With our average build cycle now down to just 106 days, we can carry less inventory and still be responsive to any demand acceleration in Q4 or as we enter 2026,” Ossowski explained. “We remain in a strong position with a healthy land pipeline that can enable us to grow the business when home buying demand increases.”

During Q3, the builder also started 6,557 homes, which was a similar pace to the previous quarter. 

This pace is consistent with our strategy to match starts with sales as we work toward an appropriate level of inventory relative to current market demand. When setting our starts pace, our goal is to have the right level of inventory to meet core demand while avoiding excess finished spec production, thus allowing our sales team to sell from a position of strength."

Spec homes are now about 50% of Pulte’s sales, as built-to-order closings are down. However, Pulte plans to drop spec homes to the 40% to 45% range in the near future.

The rate at which we've been starting homes is perfectly aligned with where we want to be in terms of a sales rate. We'll continue to chip away at the finished specs, and as we move into 2026, we'll get that kind of normalized,” Marshall said. 

Looking Ahead to 2026 

Marshall explained that consumer confidence is a key metric to watch heading into 2026. OECD’s consumer confidence index reports that consumer confidence fell 56 basis points annually as of the end of September, enough to offset the positive impacts of falling mortgage rates. As Marshall noted:

What we're kind of looking toward and for is some improvement in the overall footing and foundation of consumer confidence…if we can just get consumers confident about making this major purchase in their life, I think we can see some upside in '26.”

Tariffs are also a potential consideration, Ossowski said. 

At this time, we estimate that tariffs will effectively have little to no impact on our closings in Q4 of 2025, but they could increase build costs by roughly $1,500 per home starting in 2026,” he explained.