Second Quarter 2026
Filed Jul 30, 2026Record second-quarter net sales of 2,232, up 15%, and record second-quarter closings of 2,290; homebuilding revenues declined 8% to $1.0 billion and net income attributable to DFH declined to $28 million.
Record net sales and higher closings were offset by lower average selling prices, gross-margin compression, and lower pre-tax income and net income attributable to DFH.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesother | 2,232 | – | 15% |
| Home closingsother | 2,290 | – | 3% |
| Homebuilding revenuesGAAP | $1.0 billion | – | 8% decrease |
| Homebuilding gross marginGAAP | 14.2% | – | – |
| Adjusted homebuilding gross marginnon-GAAP | 24.2% | – | – |
| Selling, general and administrative expenseGAAP | $128 million | – | 5% decrease |
| Selling, general and administrative expense as a percentage of homebuilding revenuesGAAP | 12.8% | – | increased 50 bps |
| Pre-tax incomeGAAP | $37 million | – | – |
| Net income attributable to DFHGAAP | $28 million | – | – |
| Basic earnings per shareGAAP | $0.27 per basic share | – | – |
| Financial services pre-tax incomeGAAP | $12 million | – | remained consistent |
| Cancellation rateother | 11.1% | – | improvement of 290 bps |
| Controlled lot pipelineother | 54,091 | – | – |
| Return on participating equityother | 9.6% | – | – |
| Other incomeGAAP | $9 million | – | – |
| Backlog homesother | 2,319 homes | – | – |
| Backlog valueother | $1.2 billion | – | – |
| Average sales price in backlogother | $497,716 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| HomebuildingLower average selling prices, partially offset by higher home closings. Declines in ASP across all segments reflected changes in geographic and product mix, partially offset by reduced sales incentives. | $1.0 billion | – | 8% decrease |
Full Year 2026 outlook
- Noteapproximately 9,250 home closings
Capital returns
- Repurchased 1,012,621 Class A common shares for $15 million during the three months ended June 30, 2026.
What drove it
- Higher home-closing volume partially offset lower average sales prices in homebuilding revenue.
- Lower ASP across all segments reflected geographic and product mix changes, partially offset by reduced sales incentives.
- Gross-margin pressure primarily reflected higher land and financing costs, partially offset by direct cost reductions and cycle-time improvements.
- Financial services revenue increased by $5 million, or 11%, largely due to loan execution efficiency and hedging strategies of Jet HomeLoans.
- The cancellation rate improved to 11.1%, supported by targeted mortgage buydown programs and sales incentives.
- The active community count increased 30% year over year to 353 communities.
Concerns
- Homebuilding revenues decreased 8% despite a 3% increase in home closings because of lower average selling prices.
- Homebuilding gross margin declined to 14.2% from 16.5%, while adjusted homebuilding gross margin declined to 24.2% from 25.9%.
- SG&A as a percentage of homebuilding revenues increased 50 bps to 12.8% due to reduced absorption per active community and investments in technology and growth initiatives.
- Pre-tax income declined to $37 million from $74 million and net income attributable to DFH declined to $28 million from $57 million.
- The second quarter of 2025 included $13 million of contingent consideration income that did not recur in the second quarter of 2026.
- Controlled lot pipeline declined to 54,091 as of June 30, 2026 from 63,121 as of December 31, 2025.
- Return on participating equity was 9.6%, compared to 25.0%.
What to watch
- Execution against the approximately 9,250 home-closing full-year 2026 guidance.
- Management's planned absorption targets and margin underwriting across 353 active communities.
- Progress on reducing SG&A expense and streamlining and right-sizing operations, which management hopes to complete by year-end.
- The effect of lower costs, direct cost reductions, cycle-time improvements, and land and financing costs on homebuilding gross margin.
- Backlog conversion, including 2,319 homes valued at $1.2 billion as of June 30, 2026, and approximately 213 homes expected to be delivered in 2027 and beyond.
- Cash generation, inventory turns, disciplined capital allocation, and flexibility of the asset-light model.
Balance sheet and cash flow
- Cash and cash equivalents were $203,494 as of June 30, 2026, compared to $234,766 as of December 31, 2025. Amounts in thousands.
- Restricted cash was $50,272 as of June 30, 2026, compared to $49,624 as of December 31, 2025. Amounts in thousands.
- Inventories were $2,327,779 as of June 30, 2026, compared to $2,025,662 as of December 31, 2025. Amounts in thousands.
- Lot deposits were $501,755 as of June 30, 2026, compared to $545,253 as of December 31, 2025. Amounts in thousands.
- Mortgage loans held for sale were $198,131 as of June 30, 2026, compared to $205,089 as of December 31, 2025. Amounts in thousands.
- Total assets were $3,959,670 as of June 30, 2026, compared to $3,727,484 as of December 31, 2025. Amounts in thousands.
- Revolving credit facility and other borrowings were $1,037,986 as of June 30, 2026, compared to $822,296 as of December 31, 2025. Amounts in thousands.
- Senior unsecured notes, net were $592,342 as of June 30, 2026, compared to $591,060 as of December 31, 2025. Amounts in thousands.
- Mortgage warehouse facilities were $186,785 as of June 30, 2026, compared to $192,837 as of December 31, 2025. Amounts in thousands.
- Total liabilities were $2,347,804 as of June 30, 2026, compared to $2,123,373 as of December 31, 2025. Amounts in thousands.
- Total liquidity was $605 million as of June 30, 2026, comprised of cash and cash equivalents and availability under the revolving credit facility.
Analysis
Dream Finders delivered record second-quarter demand and production measures, with net sales of 2,232, up 15%, and home closings of 2,290, up 3%. The cancellation rate improved to 11.1% from 14.0%, and the company reported a 30% year-over-year increase in active communities to 353. These volume measures were achieved in the challenging market conditions identified by management, supported by targeted mortgage buydowns and sales incentives.
Revenue and profitability moved in the opposite direction. Homebuilding revenues declined 8% to $1.0 billion as lower average selling prices outweighed higher closing volume. Management attributed ASP declines across every segment to geographic and product mix changes, partly offset by reduced sales incentives. Homebuilding gross margin fell to 14.2% from 16.5%, while adjusted homebuilding gross margin fell to 24.2% from 25.9%, primarily reflecting higher land and financing costs despite direct cost reductions and cycle-time improvements.
Expense control provided only a partial offset. SG&A declined 5% to $128 million, largely from lower payroll and incentive compensation, but SG&A as a percentage of homebuilding revenues rose 50 bps to 12.8% because of reduced absorption per active community and investment in technology and growth initiatives. Pre-tax income was $37 million versus $74 million, and net income attributable to DFH was $28 million, or $0.27 per basic share, versus $57 million, or $0.57 per basic share. Comparability also includes $13 million of contingent consideration income in the prior-year quarter that did not recur.
Financial services pre-tax income remained consistent at $12 million, while financial services revenue increased by $5 million, or 11%, through loan execution efficiency and hedging strategies. Other income included $9 million of gains on equity securities, primarily unrealized gains from stock-price fluctuation. Backlog ended at 2,319 homes valued at $1.2 billion, compared with 2,377 homes valued at $1.1 billion at March 31, 2026, and backlog ASP was $497,716 compared with $465,237.
Capital allocation included repurchases of 1,012,621 Class A common shares for $15 million. Cash and cash equivalents were $203,494 and total liquidity was $605 million as of June 30, 2026. The company maintained its full-year 2026 guidance of approximately 9,250 home closings. The central execution priorities are optimizing the expanded community base, achieving absorption and margin underwriting targets, and completing planned SG&A streamlining and right-sizing by year-end.
Management, verbatim
The home building market continues to be challenging, but our teams have worked hard to identify opportunities to improve our cost structure with the goal of delivering more affordable homes to our customers.
Patrick Zalupski, Dream Finders Homes Founder, Co-Chairman and CEO
The higher closing volume helped partially offset lower average sales prices, which constrained margins, consistent with challenging macroeconomic conditions.
Patrick Zalupski, Dream Finders Homes Founder, Co-Chairman and CEO
We reiterate our 2026 full-year guidance of approximately 9,250 home closings.
Patrick Zalupski, Dream Finders Homes Founder, Co-Chairman and CEO
Not in the filing
stated, not guessed- Total consolidated revenue was not reported in the provided filing text.
- Operating income was not reported in the provided filing text.
- Diluted earnings per share was not reported in the provided filing text.
- Non-GAAP net income and non-GAAP earnings per share were not reported in the provided filing text.
- Operating cash flow and free cash flow were not reported in the provided filing text.
- Actual financial services revenue was not reported; only the increase of $5 million, or 11%, was reported.
- Prior-year comparison for controlled lot pipeline was not reported; the document provided a December 31, 2025 comparison.
- Prior-year and prior-quarter comparisons were not reported for backlog measures.
- Forward guidance for revenue, gross margin, operating expenses, and tax rate was not reported.
- A previous release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- The supplied balance-sheet text is truncated and does not include the full equity section or the complete balance sheet.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.