M/I Homes (NYSE:MHO) reported solid full-year 2025 results while describing a housing environment marked by “choppy demand,” affordability constraints, and elevated macro uncertainty, management said on the company’s fourth-quarter and year-end earnings call held Jan. 28, 2026.
CEO and President Bob Schottenstein also noted 2026 marks the company’s 50th year in business, adding that the builder is in “the best financial condition” in its history and believes it is well-positioned across its 17 markets.
Full-year 2025 results and profitability
Net income for the year was $403 million, or $14.74 per share, and return on equity was 13.1%, management said. Shareholders’ equity increased 8% year over year to a record $3.2 billion, and book value per share reached a record $123.
Gross margin pressure remained a theme. For 2025, gross margin was 23.0%, and excluding the $59 million in charges, gross margin was 24.4%, which management said was 220 basis points lower than 2024 primarily due to higher incentives and higher lot costs. The company said its primary incentive continues to be mortgage rate buydowns, used as needed on a community-by-community basis.
Fourth-quarter trends: orders, pricing, and charges
Management highlighted improving order momentum late in the year. New contracts increased 18% in October, 6% in November, and 4% in December, resulting in a 9% year-over-year increase in fourth-quarter contracts, CFO Phil Creek said. Sales pace was 2.8 in the quarter compared with 2.7 in the prior-year period, and the cancellation rate was 10%.
Creek said 48% of fourth-quarter sales were to first-time buyers, down from 50% a year ago. A larger share of sales came from inventory homes: 79% of fourth-quarter sales were inventory homes versus 67% in the year-ago quarter.
Revenue fell 5% in the fourth quarter to $1.1 billion, while the average closing price decreased 1% to $484,000 from $490,000 in the prior-year quarter, Creek said. The company delivered 2,301 homes in the quarter, and about 40% of deliveries came from inventory homes that were sold and delivered within the quarter. Homes in the field at year-end totaled 4,500, down from 4,700 a year ago.
Gross margin in the fourth quarter was 18.1% including $51 million of charges—$40 million of inventory charges and $11 million of warranty charges—while gross margin excluding these charges was 22.6%, Creek said. He detailed the inventory charges as $30 million of impairments and $10 million of lot deposit due diligence costs written off. Management said most impairments were in entry-level communities with average selling prices below $375,000, and warranty charges were tied to two communities in Florida.
Earnings per diluted share in the quarter fell to $2.39 from $4.71 a year earlier, Creek said. For the full year, diluted EPS decreased 25% to $14.74 from $19.71.
Regional performance, communities, and product mix
Schottenstein said fourth-quarter new contracts rose 13% year over year in the Southern Region and 4% in the Northern Region, while full-year new contracts declined 1% in the Southern Region and 9% in the Northern Region. Division income contributions in 2025 were led by Columbus, Dallas, Chicago, Orlando, and Minneapolis, he said.
On a call participant’s question about the Southern Region’s strength, Schottenstein said sales were “pretty solid” across markets, citing strength in Charlotte and Raleigh, as well as Orlando holding up well and Tampa improving through the quarter. In Texas, he said Dallas and Houston were solid, while Austin and San Antonio were weaker.
The company ended 2025 with 232 active communities versus 220 at the end of 2024. During the fourth quarter, M/I Homes opened 17 new communities and closed 18, while it opened 81 new communities for the full year, Creek said. Management expects average 2026 community count to be about 5% higher than 2025.
Schottenstein said Smart Series, the company’s most affordably priced product, continues to be a meaningful contributor. Smart Series accounted for 49% of total company sales in the fourth quarter, compared with 52% a year ago.
Management also emphasized the ongoing shift toward spec and inventory-driven sales. Schottenstein said roughly two-thirds to three-fourths of sales are now coming from specs, a change from less than 50% several years ago, and he does not expect that to change soon. He tied the spec-heavy strategy to the practicality of offering rate buydowns, noting buydowns generally work best when homes can close within 60 to 90 days.
Mortgage operations, incentives, and capital allocation
The financial services segment posted a record capture rate of 93% for the full year and delivered pre-tax income of $56 million, Schottenstein said. In the fourth quarter, mortgage and title pre-tax income was $8.5 million, down $1.6 million from 2024, on revenue of $27.8 million, Derek Klutch said. He attributed the decline primarily to lower margins on loans closed and sold, partially offset by higher average loan amounts and more loans closed.
Klutch said the company’s mortgage capture rate was 94% in the quarter, up from 91% a year earlier. Average mortgage amount rose to $414,000 from $409,000, and loans originated increased 1% to 1,874.
When asked what buydown structures are resonating, Klutch said the company has been offering a 4.875% 30-year fixed rate and believes “getting a sub-5 is the key.” In some divisions, he said the company also offers a temporary buydown that can produce a first-year payment in the 2.875% range. Schottenstein added the company has been “tinkering” with a 7/1 ARM program, but said the most successful option has been the straightforward 30-year fixed with a sub-5% note rate, sometimes paired with a 2-1 buydown.
On capital returns, Creek said the company repurchased $50 million of shares in the fourth quarter and $200 million for the year, with $220 million remaining under its repurchase authority. Over the last three years, he said the company has repurchased 13% of outstanding shares.
Management said the balance sheet remained strong. The company ended the year with $689 million of cash and no borrowings under its $900 million unsecured revolving credit facility, resulting in a debt-to-capital ratio of 18% and net debt-to-capital of zero, Schottenstein said. Creek added the revolver matures in 2030 and public debt matures in 2028 and 2030.
On land and inventory, Creek said total homebuilding inventory at year-end was $3.4 billion, up 9% year over year. In 2025, the company spent $524 million on land purchases and $646 million on land development, totaling $1.2 billion. At year-end, M/I Homes had 1,030 completed inventory homes and 2,779 total inventory homes, compared with 706 completed and 2,502 total inventory homes at the end of 2024.
Schottenstein said the company owns about 26,000 lots (slightly less than a three-year supply) and controls an additional 24,000 via options, totaling about 50,000 lots—roughly a five- to six-year supply—with 49% controlled through option contracts for flexibility.
Looking ahead, management said it is encouraged by improved traffic entering 2026, while acknowledging seasonality. Schottenstein said demand appears to be “slightly picking up” in many markets, though the company did not provide margin guidance for coming quarters.
About M/I Homes (NYSE:MHO)
M/I Homes, Inc is a publicly traded residential homebuilder founded in 1976 and headquartered in Columbus, Ohio. The company designs, markets and constructs single-family homes and townhome communities across the United States, offering a range of floor plans with customizable design options. Its product portfolio includes starter homes, move-up homes and luxury models, as well as multi-family residences in urban and suburban infill locations.
In addition to its core homebuilding operations, M/I Homes provides mortgage, title and closing services through its in-house affiliate M/I Financial Services.
