M/I Homes earnings declined in the third quarter of 2026 as lower home deliveries and closing prices weighed on revenue. The homebuilder reported net income of $66.6 million, or $2.56 per diluted share, for the three months ended September 30, compared with $106.5 million, or $3.92 per share, a year earlier. Revenue fell 5% to $1.076 billion.
Key Takeaways
- Pre-tax income fell 38% to $86.9 million, including $4.7 million in inventory charges.
- Quarterly new contracts declined 2%, and the sales value of the September backlog was down 9% from a year earlier.
- M/I Homes repurchased $50 million of common stock while maintaining an 18% homebuilding debt-to-capital ratio.
Table of Contents
- M/I Homes earnings reflect lower sales and higher overhead
- Order slowdown leaves a smaller backlog
- Balance sheet supports continued share repurchases
- Conclusion
M/I Homes earnings reflect lower sales and higher overhead
The company's third-quarter results announcement, released October 21, 2026, showed deliveries declining 2% to 2,241 homes from 2,296 a year earlier. The average home closing price fell to $460,000 from $477,000, meaning both fewer closings and lower prices contributed to weaker housing revenue.
Gross margin was 20.9%, or 21.3% excluding inventory charges. General and administrative expenses rose to $76.6 million from $70.8 million, while selling expenses increased slightly to $64.6 million. Operating income consequently fell to $83.3 million from $135.3 million.
Inventory charges were lower than the prior year's $7.6 million, so the earnings decline was not driven by a larger inventory adjustment. Excluding those charges, adjusted diluted earnings per share, a non-GAAP measure, fell to $2.70 from $4.14.
Chief Executive Robert H. Schottenstein attributed the difficult market conditions to higher mortgage interest rates, weaker demand and growing economic uncertainty. He nevertheless expressed confidence in the housing industry's long-term fundamentals.
| Item | Details |
|---|---|
| Communities at September 30 | 246 in 2026 versus 233 in 2025 |
| Third-quarter land and lot purchases | $135.2 million versus $115.4 million a year earlier |
| Third-quarter land development spending | $154.4 million versus $181.3 million a year earlier |
| Third-quarter financial services pre-tax income | $13.4 million versus $16.6 million a year earlier |
Order slowdown leaves a smaller backlog
New contracts totaled 1,861 during the quarter, down from 1,908 a year earlier. Southern-region contracts fell 4%, while Northern-region contracts increased 1%. The cancellation rate remained unchanged at 12%.
The quarterly slowdown contrasted with the first nine months of 2026, when new contracts increased 5% to 6,598. Over that same nine-month period, deliveries declined 4% to 6,361 homes.
At September 30, backlog stood at 2,046 homes, down 7%, with a total sales value of approximately $1.1 billion. Its average sales price declined to $539,000 from $553,000. The smaller backlog represents fewer contracted homes awaiting delivery as the company enters the fourth quarter.
Balance sheet supports continued share repurchases
M/I Homes ended September with approximately $621 million in cash, cash equivalents and restricted cash and no borrowings under its $900 million unsecured credit facility. Schottenstein highlighted low debt levels and the company's balance sheet as support for managing through the current housing cycle.
Shareholders' equity reached a record $3.3 billion, and book value per common share rose to $129.94 from $120.44 a year earlier. The company also completed $50 million in common-stock repurchases during the quarter.
Cash flow was less favorable during the three-month period: operating activities used $13.3 million, compared with generating $43.4 million a year earlier. For the first nine months, however, operating cash generation increased to $159.2 million from $146.1 million.
Conclusion
M/I Homes enters the fourth quarter with a smaller backlog but substantial liquidity and low homebuilding leverage. The next operating results will show whether its year-to-date growth in new contracts can persist after the third-quarter slowdown.
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