Major Builders Lean Into Concessions and Rate Buydowns as Home Sales Slip

Major homebuilders are seeing decreasing sales and margins amid buyer uncertainty, but continue to utilize concessions and mortgage rate buydowns to bring in sales.

In earning reports this week, PulteGroup, M/I Homes, and NVR, Inc. each shared similar results with shrinking year-over-year numbers.

For the third quarter 2026, PulteGroup reported net income of $476 million, a sharp decrease from its net income of $586 million in the same period 2025. NVR showed a similar trend, with its net income for quarter three at $249 million, a 27% decrease from the same period last year.

Similarly, M/I Homes saw its net income decrease 37% from last year to $67 million in the third quarter. Revenue and new orders were also down year over year for all three builders.

The declining numbers are reflected in falling builder confidence across the industry. In their October Housing Market Index, the National Association of Home Builders (NAHB) and Wells Fargo reported that builder confidence in the market for newly built single-family homes fell three points to 29 this month.

This is the lowest confidence reading since June 2012, according to NAHB.

“Housing remains squeezed by supply-side constraints and significant affordability challenges,” said NAHB Chief Economist Robert Dietz. “Demand persists, but higher mortgage rates, elevated construction costs and weaker consumer confidence are keeping more buyers on the sidelines. As a result, buyer traffic has fallen to its lowest level since April 2012, excluding the pandemic’s onset in April 2020.”

Homebuilders are leaning on quality products and incentives to help buyers to the finish line. The HMI survey fond that 43% of builders cut prices in October, the highest share during the 2020-2026 period. Additionally, 65% of builders reported using sales incentives in October, making the 19th straight month in which at least 60% of builders have done so.

“We continue to use mortgage rate buydowns as our primary incentive to drive sales. With rates rising during the quarter, the cost of such buydowns has increased, thereby impacting our margins,” said M/I Homes CEO and president, Bob Schottenstein, during the earnings call. “We have carefully managed the nature and extent of rate buydowns as we deal with rising rates.”

Schottenstein added that, while buydowns are an important tool right now, “well-located communities, quality product, and thoughtful design are just as, if not more important” for standing apart from other builders.

Major homebuilders are seeing decreasing sales and margins amid buyer uncertainty, but continue to utilize concessions and buydowns to bring in sales. (Stock image) (Ryan Tishken/Adobe Stock)

Conversely, PulteGroup seeks to capitalize on strong markets, such as the Midwest and Florida, in order to offset softer demand in markets including the Southeast and West. The company’s geographic diversity allowed it to make fewer price concessions where possible, according to President and CEO Ryan Marshall.

“We remain focused on serving core demand rather than shedding margins in pursuit of less profitable, low-returning volumes,” Marshall said on PulteGroup’s earnings call. “Obviously, we must turn assets, but sometimes lowering price doesn't generate incremental sales. Rather, it just makes all your home sales less profitable.”

Both CEOs acknowledged some of the issues hurting buyer confidence, including high interest rates and monthly payments, increased material costs, and concerns about inflation and conflict in the Middle East. Still, confidence is high regarding how the companies are managing hesitation amid challenging market conditions.

“In a world where we can't control global events or macroeconomic conditions, we can manage how we respond to the operating environment.” said Marshall. “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.”