PulteGroup (NYSE:PHM) used its fourth-quarter 2025 earnings call to highlight what management described as another year of strong operating and financial performance, despite what executives repeatedly characterized as highly variable demand throughout 2025. President and CEO Ryan Marshall said the company’s diversified operating model helped it deliver annual revenue, margins, and earnings “among the highest” in its 75-year history, while Chief Financial Officer Jim Ossowski detailed softer fourth-quarter profitability and provided initial guidance for 2026 closings, pricing, margins, and cash flow.
Full-year results and capital allocation
Marshall said PulteGroup closed more than 29,500 homes in 2025 and generated home sale revenue of $16.7 billion. The company reported full-year gross margin of 26.3% and operating margin of 16.9%, and generated $1.9 billion of cash flow from operations. Management also pointed to the balance sheet, ending the year with $2.0 billion of cash and a net debt-to-capital ratio of negative 3%.
Shareholder returns remained a focus as well. Ossowski said the company repurchased 10.6 million shares during 2025 for $1.2 billion at an average price of $112.76 per share, including $300 million in repurchases during the fourth quarter. PulteGroup also ended the year with $983 million remaining under its share repurchase authorization.
Diversification and buyer mix trends
Marshall attributed the company’s performance in part to a broad footprint across 47 markets and a “deep and balanced” buyer mix. He said 2025 closings were 38% first-time buyers, 40% move-up, and 22% active adult, in line with long-term targets. He also highlighted strength in the active adult segment, noting full-year signups among active adult buyers rose 6% year over year and were up 14% in the fourth quarter.
Management repeatedly singled out Del Webb, PulteGroup’s active adult brand, as a driver of both demand and profitability, with Marshall saying Del Webb communities “routinely deliver” the company’s highest gross margins and high returns. In the Q&A, Marshall said the company expects additional Del Webb community openings and reiterated a goal to reach a targeted mix of 25% of total unit volume from active adult over time.
Fourth-quarter operating performance: orders up, revenue down
In the fourth quarter, PulteGroup reported net new orders of 6,428 homes, up 4% from the prior-year quarter. Ossowski said the increase was driven by a 6% rise in average community count to 1,014, partly offset by a 1% decline in absorption pace to 2.1 homes per month. For the full year, absorption averaged 2.3 homes per month, down from 2.6 in 2024. The fourth-quarter cancellation rate was 12% of starting backlog, compared with 10% a year earlier.
Home sale revenue in the fourth quarter fell 5% to $4.5 billion, reflecting a 3% decline in closings to 7,821 homes and a 1% decrease in average sales price to $573,000. Ossowski also noted the quarter included approximately 100 build-to-rent closings, and management emphasized that build-to-rent remained a small part of operations, accounting for less than 2% of full-year 2025 closings.
At year-end, backlog totaled 8,495 homes valued at $5.3 billion. PulteGroup ended 2025 with 13,705 homes in production, including 7,216 spec homes. Ossowski said spec inventory was down 18% from the end of 2024 as the company worked to increase build-to-order in its pipeline.
Margins, incentives, and impairments
Fourth-quarter gross margin declined to 24.7% from 27.5% in the prior-year quarter. Ossowski said reported gross margin included $35 million, or 80 basis points, of land impairment charges. Management also cited higher incentives, which were 9.9% of gross sales price in the quarter versus 7.2% a year ago and 8.9% in the third quarter. Executives said increased incentives were primarily used to sell finished spec inventory heading into year-end, and that financing incentives were flat while price discounting was the main lever.
Other expenses totaled $99 million in the quarter, including an $81 million charge tied to the expected divestiture of the company’s off-site manufacturing operations. Marshall said PulteGroup made a strategic decision to sell that business to focus on core homebuilding, while still expecting to benefit from innovation among external building component suppliers.
For the fourth quarter, PulteGroup posted net income of $502 million, or $2.56 per share, compared with $913 million, or $4.43 per share, in the prior-year quarter. Full-year net income was $2.2 billion, or $11.12 per share. Ossowski said the quarter’s effective tax rate was 23.4%, benefiting from renewable energy tax credits; the company expects an approximately 24.5% tax rate in 2026, excluding discrete items.
2026 outlook: closings, pricing, margins, and cash flow
PulteGroup guided to first-quarter 2026 closings of 5,700 to 6,100 homes and full-year 2026 closings of 28,500 to 29,000 homes. Based on backlog pricing and expected mix, management expects average sales price to be $550,000 to $560,000 for both the first quarter and full year.
The company guided to gross margin of 24.5% to 25.0% for both the first quarter and full year 2026. Ossowski said the outlook assumes house costs will be flat to slightly down year over year, while lot costs are expected to rise 7% to 8%. Marshall said the company expects incentives to remain elevated, with the spring selling season viewed as a key driver of results.
For spending and cash flow, Ossowski said PulteGroup projects $5.4 billion of land acquisition and development spend in 2026 and expects approximately $1 billion of cash flow generation, assuming that land spend level and an increase in house inventory consistent with a higher build-to-order mix.
In closing remarks, Marshall said mortgage rates were “almost a full percentage point lower” than a year ago and argued affordability has improved as new home prices reset lower through pricing and incentives, while wages increased by “upwards of 4%.” He said the company was seeing stronger demand in parts of the Northeast, Midwest, and Southeast, with Florida signups up 13% year over year in the fourth quarter, while Texas and many western markets remained sluggish.
About PulteGroup (NYSE:PHM)
PulteGroup, Inc (NYSE: PHM) is a U.S.-based residential homebuilder that designs, constructs and sells single-family homes and develops master-planned communities. The company operates multiple national and regional brands that target different buyer segments, including first-time buyers, move-up buyers and active-adult customers. Its operations encompass land acquisition and development, home design and construction, community amenities and ongoing customer service and warranty programs.
PulteGroup markets homes under several well-known brands, such as Pulte Homes, Centex and Del Webb, among others, offering a range of product types from entry-level detached homes to larger, higher-end residences and age-restricted active-adult communities.
