M/I Homes Contracts Reverse After a Record Second Quarter

The Tip Desk · October 27, 2026 · 3 min read

Third-quarter net income was $67 million, or $2.56 a share, as pre-tax income fell 38% to $87 million.

M/I Homes, Inc. (MHO) reported that new contracts fell 2% to 1,861 in the third quarter, reversing a 15% increase to a second-quarter record of 2,387.

Homes delivered declined 2% year over year to 2,241, compared with a 6% year-over-year decline to 2,206 in the second quarter. Total revenue declined 5% to $1.08 billion.

Gross margin compressed to 20.9%, or 21.3% excluding inventory charges, from 22% in the second quarter. Pre-tax income fell 38% to $87 million, including $5 million of inventory charges, after a 35% decline to $105 million in the second quarter. Net income declined to $67 million, or $2.56 a share, from $79 million, or $3.02 a share.

Average home closing price fell to $460,000 from $477,000 in the year-ago quarter, with housing revenue down 6% to $1.03 billion. Land revenue rose to $12.0 million from $1.7 million a year earlier, lifting total homebuilding revenue to $1.04 billion. Financial services revenue declined to $32.7 million from $34.6 million a year earlier.

The cancellation rate was 12% in the third quarter, up from 8% in the second quarter. Backlog units decreased 7% to 2,046 homes and backlog sales value fell 9% to $1.1 billion, with average sales price down to $539,000 from $553,000 a year earlier. M/I Homes had 246 communities at September 30, 2026 compared with 233 a year earlier.

Southern-region new contracts fell 4% to 1,115 while Northern contracts rose 1% to 746; Southern deliveries declined 5% to 1,292 and Northern deliveries rose 1% to 949. Southern backlog average sales price fell to $501,000 from $544,000 a year earlier, while Northern backlog average sales price rose to $577,000 from $563,000.

Chief Executive Officer and President Robert H. Schottenstein said third-quarter results reflected increasingly difficult market conditions, including higher mortgage interest rates, weaker demand and growing economic uncertainty. He said the company generated $87 million of pre-tax income, equating to an 8% return, and remained confident in the long-term fundamentals of the housing industry.

Shareholders’ equity reached a record $3.3 billion and book value per share a record $130, up from a record $3.2 billion and $128 in the second quarter. Cash, cash equivalents and restricted cash declined to $621 million from $734 million a year earlier; the company repurchased $50 million of common stock. The homebuilding debt-to-capital ratio was 18%. Schottenstein said the company had no borrowings under its $900 million unsecured credit facility and a net debt-to-capital ratio of 2%.

Operating cash flow was a $13.3 million use in the third quarter versus $43.4 million provided a year earlier. Adjusted EBITDA declined to $103.4 million from $156.6 million a year earlier.