M/I Homes’ pre-tax income fell 38% in the third quarter, and the Columbus, Ohio-based builder’s chief executive described the backdrop plainly: “increasingly difficult market conditions, including higher mortgage interest rates, weaker demand and growing economic uncertainty.”
The results, released Oct. 21, 2026, cover a July-to-September quarter in which the 30-year contract rate tracked by the Mortgage Bankers Association rose above 7%.
M/I Homes third-quarter results by the numbers
- Pre-tax income: $86.9 million, down from $139.8 million a year earlier, including $4.7 million of inventory charges.
- Net income: $66.6 million, or $2.56 per diluted share, versus $106.5 million, or $3.92 per share. Excluding inventory charges, adjusted earnings were $2.70 per share, down from $4.14.
- Revenue: $1.08 billion, down 5%.
- Gross margin: 20.9%, or 21.3% excluding inventory charges. A year earlier, gross margin was about 23.9% of revenue, by our calculation from the company’s income statement.
- Deliveries: 2,241 homes, down 2%, at an average closing price of $460,000, compared with $477,000.
- New contracts: 1,861, down 2%, with a cancellation rate of 12%, unchanged from a year ago.
- Backlog: 2,046 homes worth $1.1 billion, down 7% in units and 9% in value, at an average price of $539,000 versus $553,000.
The slowdown is sharper than it looked at midyear. In July, M/I reported record second-quarter contracts even as deliveries and profit declined. For the first nine months of 2026, new contracts are still up 5%, at 6,598, but third-quarter orders fell even though the company operated more communities: 246 at Sept. 30, up from 233 a year earlier.
The South is where prices are giving way
The regional figures show where the pressure is concentrated. In M/I’s Southern region, third-quarter contracts fell 4% and deliveries fell 5%. The average price of homes in the Southern backlog dropped to $501,000 from $544,000 a year earlier, and the region’s backlog value fell to $508 million from $602 million.
The Northern region held up better: contracts rose 1%, and the average backlog price rose to $577,000 from $563,000.
The company’s land position points the same way. M/I owned or controlled 28,658 lots in the South at Sept. 30, down from 32,642 a year earlier, while its Northern lot count rose to 20,276 from 17,983. On our reading, that suggests the builder is leaning toward its Northern markets, where backlog prices are still rising, though the release does not describe a change in strategy.
A strong balance sheet, and a cautious tone
Chief Executive Robert H. Schottenstein emphasized the company’s financial cushion. “Despite the current conditions, we remain confident in the long-term fundamentals of the housing industry,” he said, citing record shareholders’ equity of $3.3 billion, no borrowings under its $900 million unsecured credit facility, $621 million in cash and a homebuilding debt-to-capital ratio of 18%.
“We are well positioned to manage through this current cycle given the strength of our balance sheet, low debt levels, diverse product offerings and well-located communities,” Schottenstein said. He called the quarter’s $87 million of pre-tax income “fairly solid,” equating to an 8% return.
M/I bought back $50 million of its stock during the quarter, and book value per share reached a record $129.94. Operating cash flow turned negative, at a $13.3 million outflow, compared with a $43.4 million inflow a year earlier, while land and lot purchases rose to $135.2 million from $115.4 million.
Context: an industry under strain
The results line up with this month’s industry data. The National Association of Home Builders’ confidence index fell to 29 in October, its lowest since 2012, with 43% of builders cutting prices, and NAR’s pending home sales index fell 7.3% to a record low in September as single-family starts slid.
M/I’s lower average closing and backlog prices fit the pattern in the NAHB survey, though the release does not say how much of the decline came from price cuts, sales incentives or a shift in the mix of homes sold. The company held its conference call at 10:30 a.m. Eastern on Oct. 21. More coverage of builders and the for-sale market is in RealtyWire’s housing market section.
