普尔特集团 (PHM) 2026年第三季度业绩电话会议：高利率压制订单与交付量lg...

普尔特集团（PulteGroup, Inc.，NYSE: PHM）公布第三季度净利润和房屋交割量下降，主因是房贷利率上升抑制了购房者看房流量，尤其是首次购房人群。尽管如此，管理层依然维持了全年毛利率预期，理由是稳健的定价机制、建造成本的下降以及库存控制得当。

业绩要点

• 2026财年第三季度净利润从2025财年第三季度的5.86亿美元（每股摊薄收益2.96美元）降至4.76亿美元（每股摊薄收益2.53美元）。
• 房屋交割量同比下降9%至6,876套，而房屋销售收入同比下降9%至约39亿美元。
• 净新订单量下降6%至6,208套。随着利率走高，看房流量同比下降14%，环比下降11%。
• 报告的房屋销售毛利率为24.8%，同比下降140个基点，环比下降20个基点。销售激励占收入的10.4%。
• 积压订单增加至10,298套，价值64亿美元，而去年同期为9,888套，价值62亿美元。
• 管理层目前预计2026全年房屋交割量为27,000至27,500套，同时维持全年毛利率指导区间在24.5%至25.0%不变。

关键财务数据

毛利率中包含2,600万美元（即70个基点）的土地减值损失。普尔特集团的建造成本为每平方英尺75美元，同比下降5%，与第二季度持平。

该公司在当季以124.70美元的平均价格回购了280万股股票，总额为3.5亿美元。2026财年前九个月，累计回购840万股，总计10亿美元。

业务与经营业绩

普尔特集团的月均去化速度从去年同期的每社区2.2套降至1.9套。去化率13%的降幅被平均社区数量增长7%（达1,077个）所部分抵消。

首次购房者和改善型购房者订单分别下降9%和14%。在社区增长以及更有可能使用现金的购房者利率敏感度较低的支撑下，活跃成年人（养老型）购房订单增长11%。普尔特集团在五年内将其活跃成年人社区数量扩大了近20%，并继续推广Explore by Del Webb项目。

佛罗里达州和部分中西部市场表现较好，有助于抵消东南部、德克萨斯州和西部地区的疲软状况。管理层将购房负担能力视为西部市场的主要制约因素，并注意到德克萨斯州全境的可用住房库存有所增加。公司表示，在其佛罗里达市场并未看到类似的库存压力。

截至本季度末，普尔特集团在建房屋为14,599套，其中包括6,627套现房。现房总库存同比下降10%，完工现房下降16%至1,696套（即每个社区1.6套）。管理层表示，库存规模仍维持在合理水平，但随着需求变化，将继续控制开工量。

该公司在第三季度开工了略多于6,500套房屋，而销售量约为6,200套。管理层将这一失衡归因于施工和许可决策做出后，9月份需求迅速放缓。

管理层业绩指导

• 2026财年第四季度交割量：管理层预计为7,000至7,500套，其中包括仍需在该季度内销售并完成交割的现房。
• 2026全年交割量：业绩指导调整为27,000至27,500套。
• 平均销售价格：预计第四季度和2026全年均为55万美元至56万美元。
• 第四季度毛利率：预计为24.0%至24.5%，反映了市场竞争状况以及附带较大折扣激励的现房交割占比提高。
• 全年毛利率：指导区间维持在24.5%至25.0%。
• 全年销售及行政费用率：由于去化放缓和社区售罄关盘延迟导致经营杠杆降低，预计占房屋销售收入的10.3%至10.5%。
• 社区数量：管理层继续预测第四季度同比增长3%至5%，尽管社区售罄关盘数量减少可能会推动增速超出该区间。
• 土地投资：2026年计划投资约53亿美元。
• 经营性现金流：管理层继续预计全年约为10亿美元。
• 第四季度税率：假设无特定期间的离散税务事件，预计约为24.5%。

风险与关注事项

管理层表示，较高的房贷利率、通货膨胀、燃油成本上涨、地缘政治紧张局势以及消费者信心转弱，导致更多潜在购房者暂停看房。9月份显现的放缓趋势一直延续到10月前几周。

首次购房者仍是对利率最敏感的群体。改善型和养老型购房者在出售二手房时也面临困难，因为潜在买家无法获得新房市场所提供的房贷利率买断优惠。

普尔特集团还提到了与移民执法相关的劳动力市场干扰，以及来自燃油和更广泛通胀的潜在成本压力。木材价格在2026年早些时候上涨后已趋于稳定，但管理层仍预计第四季度会面临一些逆风。

截至季末，该公司控制着约22.4万块地块，同比减少1.6万块。第三季度，由于不再符合风险调整后的回报门槛，公司放弃了约8,000块期权地块。管理层表示，如果市场状况需要，已准备好在2027年减少土地支出。

分析师问答要点

管理层表示，进一步降价目前无法产生足够的增量需求来证明普遍牺牲毛利率是合理的。普尔特集团将继续选择性地提供激励措施，特别是针对已完工的现房，同时优先考虑库存周转率和回报率。

该公司重申了到2027年底将销售结构优化为约60%按需定制（build-to-order）和40%现房的计划。管理层表示，按需定制建房通常能带来更高的毛利率。

融资激励措施保持稳定，第三季度总激励占比为10.4%。约40%的融资激励和远期承诺与按需定制房屋绑定。

施工周期自疫情前以来首次降至100天以下，达到99天（包括较大的多户型建筑）。管理层预计第四季度建造成本将继续同比下降低个位数百分比。

在并购方面，管理层表示普尔特集团拥有资产负债表实力寻求机会，但将保持谨慎选择。潜在交易将被主要评估为土地和市场准入投资，而非仅仅作为扩大规模的手段。

业绩电话会议完整文本

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完整财报电话会议逐字稿

管理层陈述

Operator

Hello, everyone. Thank you for joining us, and welcome to the PulteGroup, Inc. Q3 2026 Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Jim Zeumer, Vice President. Jim, please go ahead.

James Zeumer

Thank you, Erika, and good morning. I want to thank you for joining today's call as we look forward to discussing PulteGroup's third quarter operating and financial results. On today's call, I'm joined by Ryan Marshall, President and CEO; Jim Ossowski, Executive Vice President and CFO; and David Carrier, Senior Vice President of Finance.

A copy of our earnings release and this morning's presentation have been posted to our corporate website at pultegroup.com. We'll also post an audio replay of this call later today.

I would highlight that today's presentation includes forward-looking statements about the company's expected future performance. Actual results could differ materially from those suggested by our comments today. The most significant risk factors that could affect future results are summarized as part of today's earnings release and within the accompanying presentation slides. These risk factors and other key information are detailed in our SEC filings, including our annual and quarterly reports.

Now let me turn the call over to Ryan.

Ryan Marshall

Thanks, Jim, and good morning. I'm very proud of the business results, our organizations delivered thus far in 2026. In a world where we can't control global events or macroeconomic conditions, we can manage how we respond to the operating environment. To that end, I think PulteGroup continues to do an excellent job navigating today's evolving market dynamics and doing so in a way that is consistent with our long-term operating strategies.

We continued this approach in the third quarter as we remain disciplined in our business practices and focused on delivering an outstanding homebuying experience within a period that underwent meaningful change. To the former, in the third quarter, we delivered almost 7,000 homes, maintained our focus on delivering strong gross margins and overall solid returns while increasing our backlog and returning nearly $400 million back to our shareholders. As to the latter, consistent with all the reporting and commentary swirling around the current state of the U.S. housing industry, we experienced a notable slowdown in homebuying demand as we move through the third quarter and interest rates surged higher.

The reality that buyer demand slowed through the quarter won't be news to anyone on this call. What I think is interesting, however, is exactly how buyers responded. Based on feedback from our sales associates in the third quarter, they were routinely working through these important customer issues. Buyers are spending more time getting comfortable with the higher monthly payments, interest rates and financing options before moving forward. The need to sell an existing home remains one of the most significant conversion barriers. Buyers have clear expectations regarding lot characteristics, home functionality and overall fit. In other words, they are taking advantage of market conditions to be very particular in what they're willing to pay for.

And finally, timing often appears to be a symptom rather than the true obstacle. In many conversations, our sense is that not ready yet is really about financing our existing home sale readiness rather than timing itself. The most interesting point with these comments they really haven't changed very much from earlier in the year when interest rates initially started moving higher. Prospective buyers continue to have concerns about stretched affordability, high monthly payments and home sale contingencies. Our sales teams were able to help buyers solve these challenges such that our conversion rates in the third quarter were comparable to the first 2 quarters of 2026.

So if the buyer issues haven't changed, and we're still able to convert prospects at a similar rate, why the meaningful deceleration in reported sales? What changed in the quarter and most notably in September is that the big move higher in interest rates, along with inflation, global tensions, and waning confidence reached the point where more consumers simply put their search on pause. In the third quarter, our customer conversion rates were relatively stable but traffic to our communities was down 14% from the prior year and on a sequential basis, down 11% from the second quarter. These conditions have continued through the first few weeks of October.

As you would expect, most of the missing traffic were first-time buyers as this group remains the most impacted by higher interest rates. Not only did this pronounced slowdown among our first-time buyers impact our third quarter sign-ups, but it also directly impacted our closing volumes for the quarter as the majority of our spec sales are within our first-time buyer communities. We have done a great job controlling starts and in turn, spec inventory but the impact of having fewer finished spec sales reduced our home closings in the third quarter.

I fully appreciate that this isn't a very upbeat message for our earnings call but it's important to acknowledge that the change in the market conditions over the past 30 to 45 days when discussing PulteGroup's results for the quarter and the year-to-date. Consistent with previous quarters, in the third quarter, we focused on serving what we consider core homebuying demand rather than chasing volume in a market showing little price elasticity.

You can see this in PulteGroup's reported Q3 financial results as closings came in slightly below our guide, but a strong reported gross margin of 24.8% helped the company to deliver earnings of $476 million or $2.53 per share. Through the first 9 months of 2026, PulteGroup delivered just shy of 20,000 homes and generated $11 billion of home sale revenues. Operating within this year's more competitive market conditions, we have appropriately managed price and pace to capture sales while driving year-to-date gross margins and operating margins of 24.7% and 14.2%, respectively.

In alignment with our capital allocation priorities, our strong 9-month financial results supported an investment of $4 billion in the land acquisition and development and the return of $1.2 billion to shareholders through share repurchases and dividends. I'll provide more detail on how we're navigating current demand dynamics later.

But first, let me turn the call over to Jim Ossowski, for a detailed review of PulteGroup's third quarter financial performance.

James Ossowski

Thank you, Ryan, and good morning. And what was a challenging quarter for U.S. housing, our financial results once again show the value of our more diversified and balanced operating platform. Let's get started.

Our net new orders in the third quarter totaled 6,208 homes, which is a decrease of 6% from the third quarter of last year, reflective of Ryan's comments about lower consumer traffic. The decrease in Q3 net new orders was driven by a 13% decrease in absorption pace, partially offset by a 7% increase in average community count of 1,077 for the quarter. In the third quarter, our cancellation rate as a percentage of starting backlog was 10%, which is down from 12% last year and down 50 basis points from Q2 of this year. Even in today's dynamic demand environment, these relatively stable cancellation rates suggest that customers under contract remain committed to closing on their home.

Our absorption pace for the third quarter was 1.9 homes per month, which compares with an absorption pace of 2.2 homes per month last year. Absorption pace was lowest in September as interest rates surge higher throughout the month. Our lower absorption pace as a consequence of the drop in prospective buyer traffic to PulteGroup communities.

By buyer group, net new orders in the third quarter among first-time and move-up buyers were down 9% and 14%, respectively, from last year. Once again, we benefited from our leadership position serving active with all consumers as Q3 signups among those buyers were up 11% over last year. The slower sales among move-up buyers reflect in part ongoing weakness within this buyer group in our Texas and West operations.

Within our active-adult business, we continue to benefit from our prior year land investments as the increase in net new orders was a result of ongoing community count growth. Over the past 5 years, we have grown our active-adult community count by almost 20%, and we look to increase market share even further with the ongoing rollout of our new Explore by Del Webb brand.

PulteGroup's third quarter home sale revenues totaled $3.9 million which is down 9% from last year's third quarter revenues of $4.2 billion. Lower revenues for the quarter were primarily the result of a 9% decrease in closing volumes to 6,876 homes. Q3 closing volumes were negatively impacted by rising interest rates and reduced consumer confidence as we sold a fewer number of spec homes that we were expecting to sell and close within the period.

By buyer group, third quarter closings break down as follows: first time in move-up were both 38%, while active-adult accounted for 24% of closings in the period. Closings in the third quarter of 2025 were comprised of 39% first-time, 39% move-up and 22% active-adult.

On a year-over-year basis, third quarter backlog was higher in both units and value. We ended this year's third quarter with a backlog of 10,298 homes valued at $6.4 billion, compared with prior year backlog of 9,888 homes with a value of $6.2 billion. At the end of the third quarter, we had 14,599 homes in production, of which 6,627 or 45% were spec homes.

Our divisions have done an excellent job managing production as total specs are down 10% from the same period last year while finished specs are down 16% from last year to 1,696 or an average of 1.6 finished spec homes per community. While our current spec inventory level is rightsized, we continue to tightly control our start pace to align production with changing demand dynamics.

In the third quarter, we started just over 6,500 homes during a period in which we sold 6,200 houses. Based on backlog, homes under construction and recent trends in the pace of spec sales, we now expect to close between 7,000 and 7,500 homes in the fourth quarter. We still have to sell and close a number of spec homes to achieve the guide, so we'll be closely assessing buyer demand and taking the appropriate steps needed to convert spec inventory into closings.

Further, given the expected Q4 closings, we now anticipate full year closings to be in the range of 27,000 to 27,500. Based on the mix of homes we anticipate closing in the fourth quarter, we are still guiding our average sales price in closings to be in the range of $550,000 to $560,000 in the fourth quarter and for the full year. Based on prior year land investments, we came into 2026 expecting year-over-year community count growth of 3% to 5% for each quarter, but our average Q3 community count of 1,077 was up 7% over last year. The higher growth rate realized in Q3 reflects the slower close out of existing communities in the period.

We are still forecasting year-over-year community count growth of 3% to 5% in the fourth quarter but fewer community closeouts in the period could again elevate the percentage growth rate. Consistent with our previous guidance, our reported third quarter gross margin was 24.8%, which is down 140 basis points from last year and down 20 basis points sequentially from Q2 of this year. Our reported third quarter gross margin is inclusive of incentives of 10.4% as well as $26 million or 70 basis points of land impairment charges recorded in the period. In the comparable prior year period, incentives were 8.9% and we recorded $17 million of land impairments.

On a positive note, our national and divisional procurement teams continue to do an excellent job working with our trades and product suppliers to manage construction costs. Pulte's third quarter build costs were $75 per square foot, which is down 5% from last year and flat with the second quarter of 2026. Taking into consideration our backlog, current demand conditions, competitive market dynamics and the need to cycle through existing spec inventory, we expect fourth quarter gross margins to be in the range of 24.0% to 24.5%. Given our Q4 margin guide, we are maintaining our guidance for full year gross margin to be in the range of 24.5% to 25.0%.

SG&A expense for the third quarter was $397 million or 10.3% of home sale revenues. In Q3 of last year, SG&A expense was $401 million or 9.4% of home sale revenues. With higher interest rates pressuring consumer demand and the potential that rates remain elevated for longer, we remain focused on controlling overhead expenses while still delivering superior build quality and an outstanding homebuying experience. Still, given our updated forecast for fewer closings this year, we now expect full year 2026 SG&A expense to be in the range of 10.3% to 10.5% of home sale revenues. Our financial services operations reported third quarter pretax income of $46 million, which is up slightly from last year's pretax income of $44 million.

Mortgage capture rate in this year's third quarter was 85% compared with 84% last year. PulteGroup's reported pretax income for the third quarter was $625 million, our tax expense for the period was $149 million or an effective tax rate of 23.9%. Our effective tax rate benefited from energy tax credits recorded in Q3. For the fourth quarter, we expect our tax rate to be approximately 24.5%, assuming no discrete period specific tax events.

Q3 reported income was $476 million or $2.53 per share. In the third quarter of 2025, we reported net income of $586 million or $2.96 per share. Pulte's Q3 earnings per share was calculated based on 188 million diluted shares, which was down 5% from the prior year as we continue to allocate capital to systematically repurchase outstanding shares. In Q3 of this year, we repurchased 2.8 million common shares for $350 million or an average price of $124.70 per share. Over the first 9 months of 2026, we repurchased 8.4 million common shares for $1 billion or an average price of $123.51 per share.

While market conditions can make underwriting land transactions more difficult, we were successful in investing $1.3 billion in land acquisition and development in the third quarter, of which 51% was for the development of our existing land assets. Year-to-date, we have invested $4 billion in land acquisition and development. We now expect to invest approximately $5.3 billion In land for all of 2026.

Inclusive of land transactions completed in the period, we ended Q3 with approximately 224,000 lots under control. Total lots under control are down 16,000 from the third quarter of last year and down 4,000 lots sequentially from Q2 of this year. We continue to underwrite new land deals but we are also walking away from select option transactions that may no longer meet risk-adjusted return thresholds. In the third quarter, we elected to walk away from approximately 8,000 lots previously held under option. As we have discussed on prior calls, we view lot options as a tool to both improve project returns and to help mitigate market risk. One without the other, really provides PulteGroup with limited, if any, value.

Reflecting on our differentiated approach to the lot options, at the end of Q3, over 85% of PulteGroup's land options were with underlying land sellers. The rest of our options are structured as one-off transactions with a select number of land bankers. At the end of the quarter, we had 55% of our lots held under option. And lastly, when it comes to optioning dirt, we continue to solve for the best business outcome on a deal-by-deal basis rather than simply targeting an option lot percentage.

Given our operating results for the first 9 months of 2026, we still expect operating cash flow generation for the full year to be approximately $1 billion. And finally, we ended Q3 with $1.4 billion of cash and debt to capital ratio of 12.1%. Adjusting for the cash balance, our net debt-to-capital ratio at quarter end was 3%.

Now let me turn the call back to Ryan for some final comments.

Ryan Marshall

Thanks, Jim. This latest increase in interest rates has forced more consumers to the sidelines and work to make overall operating conditions more challenging. While higher rates made demand conditions in the third quarter generally more competitive throughout the country, our geographic diversity, again, proved incredibly valuable. In the third quarter, we continue to see outperformance in our Florida operations in key markets in the Midwest. Better performance in these markets helped to offset softer demand in other areas of the country including markets in the Southeast and ongoing weakness out west.

Looking beyond the quarterly earnings, I believe in the fundamental strength of long-term housing demand and across all the generations and populations, the desire for homeownership remains as high as ever as the financial and emotional underpinnings are too compelling to ignore. I also believe that after months of mortgage rates above 7%, consumers could view even a modest pullback in interest rates as reason enough to reengage in the homebuying process. Although I acknowledge that it may take more than just to move lower in interest rates, as consumer confidence is weighed down by rising fuel costs and fears about ongoing inflation and conflict in the Middle East.

While a quick reacceleration in homebuying activity is certainly possible, the reality is that higher interest rates pressured industry-wide new home sales in September and the potential for interest rates to stay higher for longer is clearly present. As such, I think it's helpful to discuss how we're assessing market opportunities and challenges.

First, our diversified operating platform offers tremendous advantages as we can capitalize on the stronger markets and consumer groups to help offset any weakness in other parts of the business.

Second, consistent with our demonstrated operating practices, we remain focused on serving core demand rather than shedding margins in pursuit of less profitable low returning volumes. Obviously, we must turn assets. But sometimes lowering price doesn't generate incremental sales, rather it just makes all your home sales less profitable.

Third, we have a robust and well structured land pipeline. We are on track to invest $5.3 billion in land acquisition and development this year. If conditions warrant, we are fully prepared to reduce land spend in 2027. Further, given the very intentional way we have structured our controlled lot positions, we can and will walk away from option lots that no longer meet return hurdles.

And finally, PulteGroup's balance sheet provides tremendous strength and financial flexibility. With $1.4 billion in cash and net debt to capital of only 3%, not only can we weather tough times, but we can capitalize on market opportunities that they develop. Last week, we had our quarterly operations reviews with my senior team, along with our 4 area presidents and the President of Pulte Financial Services. Beyond just reviewing Q3 results, the field leaders had already developed action plans and where appropriate, are already taking steps to respond to the changing market dynamics. I can't overestimate the value of having an experienced leadership team that can quickly assess and adjust.

I want to thank them and the entire PulteGroup organization for the operating and financial success they delivered in the third quarter and for their efforts to ensure our company's success going forward.

Now let me turn the call over to Jim Zeumer.

James Zeumer

Thanks, Ryan. We're now fair to open the call for questions. So we can get to as many questions as possible during the remaining time of this call we ask that you limit yourself to one question and one follow-up.

Erika, we are prepared to start Q&A.

Operator

[Operator Instructions] Your first question comes from the line of Alan Ratner with Zelman.

分析师问答

Alan Ratner

Thanks for all the detail and a nice job in a tough market. I appreciate the color on the traffic during the quarter. I was hoping to dig in a little bit more on some price point trends that you're seeing, recognizing that both move-up and active-adult, I think, have been relative outperformers for quite a while now. Did you see the same magnitude of traffic pullback at those price points? Or are you seeing maybe differences in behavior between the move-up and active-adult buyers versus entry level right now given the recent rate move?

Ryan Marshall

Yes, Alan, thanks for the question. Definitely, all buyer groups felt it, but the first time it was outsized impact there. So I don't think any buyer group is totally immune, but the move-up in the active-adult certainly fare better, especially given a lot of those buyers in our world pay cash, they're less kind of rate sensitive than the first-time buyers, which largely 100% need a 30-year mortgage or some kind of mortgage.

Alan Ratner

Got it. Makes sense. And then on the gross margin guide, obviously, a little bit of pressure sequentially but not too much. I'm just curious with incentives flat on closings. Could you talk a little bit about what you're doing on orders right now? And ultimately, how high are you willing to take that number if rates don't pull back at all in the next year's spring selling season? Or how should we think about just the price versus volume that you play next year?

Ryan Marshall

Yes, Alan, I think the way I'd address that is we really -- and we tried to address it in our prepared remarks that we're seeing inelasticity in price right now. And so a lot of incremental discount above and beyond where we're at, doesn't necessarily generate a whole bunch of incremental sales that creates economic benefit from the incremental sales. We definitely do focus on inventory turn, and it's a critical component of how we operate. So there is a point at which you say we have to kind of lean in more in order to turn inventory but we're quite a bit above those levels.

So with that in mind, we're really looking at if we're going to lean in with more incentives, does it truly generate incremental sales volume. And if the answer is no, we think the much better economic outcome for our company and our shareholder is to kind of stay in the ballpark that we are right now. We certainly benefited -- our margin certainly benefited in the most recent quarter because we sold less spec.

And generally, that spec -- final spec inventory is where there are higher incentives. So little bit of a double-edged sword in the third quarter, the less spec inventory sales helped margin, but it hurt us on the volume side. As we move into the fourth quarter, we've factored in kind of some of the incremental discounts that we'd expect to give on the spec inventory, and that's all baked into the margin guidance that we've given for the quarter and the full year.

Operator

Your next question comes from the line of John Lovallo with UBS.

John Lovallo

The first one is several -- or 2 of your competitors had talked about a little bit of incremental pressure from the existing home market as folks were willing to be a little bit more competitive on pricing after waiting for 3 or 4 years to sell. Curious if this had an impact on your move-up segment in particular? And then maybe conversely, this did, in fact, happen, is this a positive in the sense that it sort of restarts the flywheel and the housing value chain, you could actually result in a better year as we move forward, perhaps?

Ryan Marshall

John, I think there's a few anecdotal kind of markets where maybe you saw some movement in price. But the environment that we've been living in and we continue to live in is that pricing between new and resale is almost on top of one another. And in fact, in some cases, resales more expensive than new which is a phenomenon that I don't think we've seen often in the 25 years that I've been in this business. So I don't know that I would necessarily 100% agree that we've seen a big unlock in resale pricing going lower. I do agree with you that the resale market freeing up does restart the flywheel, and that's been a consistent comment that we've been making for the better part of the 1.5 years.

The thing I would comment on, and Jim -- I touched on it, so did Jim, one of the biggest impediments that we're seeing right now is that our move-up and active-adult buyers need to sell their existing home, and that is tough. And part of the reason it's tough is because the prospective buyer that's going to buy their home is faced with a 7.5% interest rate, and they don't have the ability to tap into the bought-down mortgage rate like we can offer. So there's definitely some headwinds out there as it relates to resale market and the new home market that is largely centered around interest rates, we can certainly address some of that, and we are with our bought down rate, but it's hard to reach over the fence and help address the challenge on the resale side.

John Lovallo

Yes. That's helpful. And I'm curious what you guys experienced on the stick and brick and labor cost side during the quarter? What's your expectation also as we move into the fourth quarter?

James Ossowski

Yes. We're really pleased with where we're at. This is the third quarter in a row that we've seen our sticks and bricks are down 5% on a year-over-year basis. So as we look at it, the teams are doing a great job and continue to expect that we can bring costs down year-over-year on low single digits again in the fourth quarter.

Operator

Your next question comes from the line of Stephen Kim with Evercore ISI.

Stephen Kim

I was wondering if you could talk a little bit about the SG&A. I know that, that was something that last quarter folks are kind of wondering how you were going to hit your guide for the year. I understand that, obviously, slower sales and all that certainly creates leverage issues. But your SG&A this quarter actually exceeded us in actual dollars even though the revenues were a little lower. So I just wanted to know, was there anything that was unexpected to you in terms of something that actually caused you to incur greater SG&A dollars than you expected this quarter?

And as you look ahead, I'm curious if your increased guidance assumes maybe something different than you had previously thought about maybe the mix of homes like high-end homes, I'm thinking out in the west or something like that, which creates deleverage issues for you in the fourth quarter?

Ryan Marshall

Steve, great question. SG&A is something we look at all the time, really as we look at kind of the third quarter, you're right. As absorption slows and volume has come down, we've really run into a couple of things. One, some of our communities are hanging around longer than we thought. So some of those that are taking longer to close out, we've got costs on that. You nailed it at lower absorption paces, whether you're selling 3 homes a month in a community or 2 homes a month in the community, you still have to staff at the exact same way.

So when we factored in the guide, we looked at kind of where it's at. We looked at our volume that we lowered for the course of the year, and we really don't have anything noteworthy that we need to change course on. It's just more of a realization of it as communities are hanging around longer and absorption paces have come down, we've lost some leverage in the business.

Stephen Kim

Yes. If I could ask a follow-up [indiscernible] on the SG&A. Jim, is it -- we are seeing that you're performing obviously better on the active-adult but the entry level as well as the move-up, maybe it's more challenging. I'm curious, is there a mix issue as well that we should be thinking about for your SG&A.? For instance, does your active-adult business carry with it, maybe a little bit of a higher SG&A load, partially offset by higher gross margin? Or is there anything like that? I mean I generally think higher-priced homes have less SG&A as a percent. In other words, better SG&A leverage, but maybe if you can just speak to how mix can affect SG&A.

James Ossowski

Yes. I would tell you, Stephen, we really don't see across our different consumer groups, a different mix of SG&A. You're right, if you're at a higher ASP level, you probably get better leverage out of it. But again, when you look at the absorptions, we quoted, they were off 13% for the quarter. again, we're still staffing at the same level in our communities from a construction and sales standpoint. But as you lose that leverage, that's really the headwind that we're fighting against this year.

Ryan Marshall

Stephen, the only other thing with our Del Webb communities, they tend to be bigger. They have bigger sales centers, they have more models, but you do a lot more volume out of those communities as well. So to Jim's point, the way we run our businesses and the way the management teams are set up, there's really no difference between a Del Webb community and a first-time Centex community in terms of kind of the overhead dollars that are spent in order to run a community.

Operator

Your next question comes from the line of Matthew Bouley with Barclays.

Matthew Bouley

So on the gross margin, the Q4 gross margin, you mentioned market conditions and kind of needing to clear out existing spec and sort of the incentives required to do that. I guess how much of that 4Q margin guide is specifically related to those 2 issues, the greater spec mix and the incentives required to clear out that?

My question is really, is there an implication that if you are successful in kind of clearing out that spec in Q4, could that headwind actually lessen a little bit into 2027 and obviously, the rest is dependent on market conditions. Just trying to think about what does and doesn't persist as we get into '27?

Ryan Marshall

Matt, I just maybe clarify one thing. There's not -- we don't have a spec problem. Our spec inventory is kind of right where we wanted it to be. And so we actually had less spec closings that came through in the third quarter than we would have expected. And so we did get a benefit above the guide. Our Q4 margins we've, I think, adjusted for the reality that we're in and we've mixed in stuff that's in backlog, stuff that was dirt sales, stuff that sold as spec in process and then things that we would expect to sell and close during the quarter as a spec home, which typically come with lower gross margins and higher discounts.

To your question about what does that mean for next year? I think it's going to kind of come down to, do you have a change in mix between dirt [indiscernible] and spec? We've been fairly vocal and open to say, we're moving kind of transitioning the business back to more dirt sales. And it's -- it's -- we said we'd hope to get it accomplished by the end of 2027. We are on track to do that. Markets gotten a little bit tougher, but we'd still expect to be back to a kind of optimal mix of 60% dirt sale, 40% spec. If all things being equal, that would have a favorable outcome in terms of margin just because our highest margins come on homes that we sell is dirt, if that all kind of holds together, Matt.

Matthew Bouley

Got it. No, yes. No, that's really helpful. Secondly, just on production, it looked like you started more homes than you sold in Q3. Was that always the plan? Or just more of a function of how sort of quickly the market conditions changed? Going forward, how would you think about kind of balancing starts in sales and sort of further reducing inventory from here?

Ryan Marshall

Yes, Matt, it's entirely a function of how quickly the market turned and specifically in September. So as you -- I'm sure you can appreciate we submit for permits in August for homes that are going to start in September. So kind of the balls and motion and rolling on those things. And because there is such a leg down on sign up and sign up activity in September, we're a few hundred units out of balance from kind of perfectly matched starts to sales.

Operator

Your next question comes from the line of Mike Dahl with RBC Capital Markets.

Michael Dahl

Ryan, just sticking with the fourth quarter dynamic and the specs. Can you just help us understand within the closing guide, you mentioned you have to sell and close a number of specs to hit that, what is that ratio of specs that assumed in the 4Q closings guide that still need to be sold? And how does that compare to the most recent periods?

Ryan Marshall

So it's going to be more comparable to what we experienced in the third quarter, Mike, which was dramatically lower than kind of what we experienced Q4 of last year. Q1, Q2 of this year, there was a meaningful change when rates went to 7.5%. And as much as anything, I think a meaningful change in how the consumer is feeling and there are so many things out there that we just have 0 control over gasoline at $6-plus box a gallon, the war, consumer confidence, et cetera. So we've factored in our most recent spec conversion experience into our Q4 guide.

Michael Dahl

Okay. Good to hear. And then I know it's not standard practice for you guys, but just given the situation, can you help us understand just -- or maybe quantify a little more what the falloff in September was on maybe order patterns or trends on a year-on-year basis by months? And then you mentioned October started off the same. So October as well. And I know it's heat at the moment here, but -- and we don't want to -- we want to be careful about how much to extrapolate after rates have kind of gone up in a straight line, but this is kind of annual planning time for yourselves and a lot of other builders. So just any early thoughts on how this influences your planning for '27 production?

Ryan Marshall

Yes. Mike, we're probably not going to break with trend on the month-by-month kind of commentary other than just to say that there was a noticeable change in September and and it's continued into October. We are in the middle of kind of planning time right now. And it's -- the current environment is maybe a more difficult planning time. It was part of the reason that in my prepared remarks towards the end, I tried to kind of highlight kind of how we're seeing opportunities and challenges and where we think there are some potential opportunities than there are some, and then there's plenty of challenges out there as well.

The biggest thing that we're spending the most time talking about is how we're going to think about capital allocation. We have a great business. We're in the right geographies. We love the consumers that we're serving. There are so many -- and we have an amazing balance sheet. There are so many good things about our business, our strategy, how we're operating. Those are the things that we can control and we're saying grace over and where we can really kind of position ourselves for continued success is to be thoughtful and smart about land spend and capital allocation.

I think we've been super clear. We're running this business for the long term, not for kind of this quarter or even next quarter. So that's how we're spending most of the time thinking about our planning process is really all around capital allocation.

Operator

The next question comes from the line of Sam Reid with Wells Fargo.

Unknown Analyst

I wanted to touch on incentive loads a little bit in the third quarter. It looks like they were sort of flattish sequentially versus Q2. But could we perhaps isolate any changes in the composition of those incentive loads by buyer cohort? Like I just want to better understand was their sequential step-up in incentive flows on spec? And conversely, or any changes to incentive loads across move-up?

And then you've mentioned in the past that you've been doing more build-to-order closings with rate buydowns forward commitments any sense of the attach rate there?

James Ossowski

Sure. I would tell you, during the quarter, the 10.4%, which was flat sequentially with Q2, we really didn't see any kind of a change in that dynamic amongst the consumer groups or even within the mixture of it. It's split between financing incentives as well as discounts on, for example, speculative homes that we have. On the build to order, we're really happy with how we've been able to use the financing incentives on that today, about 40% of the financing incentives and forward commitments, we do our 4 build-to-order homes. So as Ryan has touched on before, those are higher-margin homes. And so we like the opportunity to use those as we start to kind of build our backlog for Q4 and now still even going into 2027.

Unknown Analyst

That's helpful. And then let's maybe switch gears and talk SG&A for a second. I wanted to drill down a little bit there. Just talk through how much of the perhaps relative to expectations, above expectations, I should say, was a function of higher third-party broker commissions. We've heard anecdotally from some of our contacts that they've been stepping up across many markets. So curious whether you're embedding, let's call it, higher broker attach rate and/or higher broker commission into your fourth quarter implied SG&A guide as well?

Ryan Marshall

Yes, Sam, I would tell you there's not much in our SG&A that's different as a result of broker rate or attachment. The attachment rate has been running higher for probably the better part of 18 months because of lack of resale activity. So the brokers that are out there with buyers, the good news is more of them are coming into our sales centers, which means our attachment rate ticks up slightly, but that's about it. We do, in certain cases, offer broker incentives, but we really try to manage that. I'd rather see -- if there's incentives that need to be given, we'd rather see those go to the buyer.

Operator

Your next question comes from the line of Michael Rehaut with Melius.

Unknown Analyst

Wanted to first focus on -- I wanted to first focus on supply, if we can just dial into that a little bit more. And specifically thinking about the secondary market and if there are any markets that kind of stand out to you as being more challenging from a supply standpoint, last month, the competitor highlighted Florida and Texas. And I'm just curious if you're seeing any markets that really stand out on that level in terms of the existing for-sale market that maybe have added a little bit of pressure to the broader landscape.

Ryan Marshall

Mike, we'd highlight Texas. Those -- really all 4 markets. I think have seen an uptick in available inventory. And it's -- all those -- the entire state has been more difficult for some time. We have seen flashes of brilliance in Dallas and Houston but Texas continues to be a tougher operating environment. Florida, where we're positioned, the consumers that we're serving, we're not seeing inventory pressure in Florida.

Unknown Analyst

Okay. Great. And maybe just shifting gears a little bit to the balance sheet and the M&A landscape, History Maker being acquired this past quarter, a pretty good-sized regional player in Texas. Just wanted your thoughts in terms of -- in this type of backdrop, I'm sure there are, I'd assume, some decent-sized regional players that are perhaps seeing some levels of stress in the current market backdrop. You have a fantastic balance sheet. And just wanted to know if your -- from your perspective, if you're seeing maybe an increase in opportunities or perhaps sellers are taking a step back because they don't want to sell in this type of market? Any thoughts around kind of the opportunity set if it's changed? And how you're thinking about your approach to the market relative to past years?

Ryan Marshall

Mike, we do have a phenomenal balance sheet, and it's one of the things that I think is arguably are -- will probably prove to be one of our biggest advantages in a more difficult operating environment. In terms of our approach to kind of M&A, et cetera, part of the reason we have such a great balance sheet is because we've avoided chasing kind of unnecessary or inappropriate opportunities and we'll stick to that kind of game plan. We do look at a lot of things, and we're just -- we're very choosy. And as -- and I won't spend a ton of time going through it today, we look at M&A opportunities is really more allocation of capital into land. And so we think hard about the consumer groups that an M&A opportunity will bring to us. We think hard about the markets that it will give us access to.

And as we go through the evaluation process, we don't think that it helps us in terms of our long-term strategy, we're not interested in acquiring a competitor just for the sake of saying we got bigger because that's not where we think value is created. So we certainly got the financial strength and financial capability to execute, but we're going to be super disciplined that if we are pursuing an opportunity, it truly further and gives us gains against our strategic priorities.

Operator

Your next question comes from the line of Anthony Pettinari with Citi.

Anthony Pettinari

I was wondering how cycle times trended in 3Q and if there's any scope for improvement there? And just more generally, as you think about levers you can pull to protect margins and returns in a softer market, is there anything worth mentioning in terms of home format or home size or anything else we should keep in mind?

Ryan Marshall

Anthony, thanks for the question. And our procurement teams just did a phenomenal job. We've maintained kind of our price per foot in the current environment. And I think we've done just a wonderful job with that. There is pressure out there on a couple of fronts. And to your cycle time question, we went below 100 days for the first time since pre-COVID, and that includes all of the big 4 and 5-story multifamily buildings that we do are incorporated in that 99 days. So I think our construction teams have done an amazing job managing production. Our procurement teams have done a great job with cost.

The headwinds that are out there, the current immigration enforcement, which I think has been widely reported on, that's having disruption in the broad labor market. And so we're certainly navigating some cycle time pressures as a result of kind of what's happening more broadly with the labor pool. And then in terms of are there cost opportunities, we're always looking for them. But in an inflationary environment, which we seem to clearly be back in, I think it will get harder and harder, especially with kind of fuel where it is and nothing gets to our job sites without coming on a truck, those cost pressures, I think, are real.

Anthony Pettinari

Okay. That's very helpful. And then you spoke to weakness in Texas. I think earlier, you also mentioned the West. Are you seeing anything specific to those markets around local economies or price points or mix or how white collar workers are doing? Anything that you'd call out in the western region?

Ryan Marshall

Yes. The west has been tough for a long time. We're probably on 2, 2.5 years of challenges in the west and they're really good communities. They're nice places to live, they're thriving economies. I don't think there's anything that's broken. The biggest thing that I'd call out is just affordability. It's really expensive in a lot of the Western markets that we operate in, particularly the coastal markets. So they'll -- they're good places where jobs are being created and people want to live there. We're pretty confident that this too will turn and they'll come back into being kind of favorable places to do business, but we're in a little bit of a barrel right now in the west.

Operator

Your next question comes from the line of Rafe Jadrosich with Bank of America.

Rafe Jadrosich

It's Rafe. Just first, on the stick and brick side, I think you commented on the year-over-year trend that you're still expecting down low single digit in the fourth quarter. How do we think about it sequentially? Is that flattening out? Or are you starting to see any inflation there?

James Ossowski

Yes. Really, the only thing that I'd say in the fourth quarter, and we had called it out earlier in the year was lumber started to move-up earlier in the year, which we said would be a little bit of a headwind in the fourth quarter. Lumber has started to stabilize, though, but really, that's it. Otherwise, I'd tell you the teams continue to do a good job. And I would tell you, Q4 should look pretty similar to where Q3 is.

Rafe Jadrosich

That's helpful. And then if sort of the housing macro backdrop stays similar here kind of into '27, like would you expect raw land prices to start to come down? You talked about walking away for some lots. Like how do you think about the land price environment from here?

Ryan Marshall

Yes, Rafe, I think it really depends on where the land is located from a city MSA standpoint but also the specific city block that, that land is located in. So there's some land that it continues to accelerate in price. It's super competitive. And there's no decreases there. Some of your B and C locations we're certainly seeing kind of pricing there change. We all -- just as a matter of practice, good market, bad market, we always re-underwrite land kind of multiple times as we go through kind of the entitlement process before we ultimately buy it.

So probably the biggest benefit that we've seen is the acceleration of land prices, the rate of acceleration has slowed significantly. But I don't feel that we're quite into a place where I can tell you that land has gone on 30% end-of-season clearance. We're probably not quite there yet.

Operator

We will take our final question from Susan Maklari from Goldman Sachs.

Susan Maklari

I wanted to talk a bit about at the higher end once people do start to transact, are you seeing any change in the upgrades or the features that they are opting to put in the homes? Are they still spending at the same level once they do decide to make that decision?

Ryan Marshall

Sue, they are. It's a buyer that's -- assuming they're making the decision to move forward, they're better prepared. They've got equity from a prior sale. -- their personal balance sheets are stronger and we're seeing little change in terms of how they're behaving relative to kind of prior quarters.

James Ossowski

Yes. I mean for reference, Susan, in the quarter, options and lot premiums were 117,000 per lot. That's up from last year and from the prior quarter. A little bit of that is mix because we had less speculative sales. But to Ryan's point, if people are committed to coming in and closing on the home, they're taking the opportunity to pick the things that they want.

Susan Maklari

Okay. That's helpful. And then maybe just building on that, are you seeing that there's more cash sales that are coming through as well in this market?

Ryan Marshall

No. I think our mix of cash buyers by brand is pretty consistent with what we've historically seen. So as a percentage, because we had less first time, maybe it ticked up a little bit overall, but the way we do, and I think you should look at it is by buyer type and it's unchanged.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Jim Zeumer for closing remarks.

James Zeumer

I appreciate everybody's time this morning. We're certainly available if you have questions over the course of the day. Otherwise, we will look forward to talking to you in the quarter. Thanks, everybody.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.

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