PulteGroup Prioritizes Build-to-Order Homes Amid Faster Construction Cycles

PulteGroup Prioritizes Build-to-Order Homes Amid Faster Construction Cycles

PulteGroup is executing a strategic pivot to increase its mix of build-to-order (BTO) homes, a move designed to bolster efficiency and improve margins for 2026. The third-largest homebuilder is actively moving away from speculative starts toward a model that relies more on pre-sold homes, targeting a split of 60% BTO and 40% speculative builds next year.

According to the company’s second-quarter earnings call, this transition is gaining momentum. In the second quarter, the order mix stood at 45% BTO, up from 39% during the same six-month period in the prior year. This shift reverses a previous trend where the company increased spec inventory after supply chain disruptions extended construction timelines.

Management indicated that build cycle times have improved significantly, dropping to approximately 100 days from 123 days a year ago. These reduced timelines allow the builder to selectively utilize market rate buydowns to facilitate BTO sales. Consequently, the company’s inventory of spec homes in production has decreased, falling from roughly 8,800 at the end of 2024 to 7,200 at the end of 2025, and further down to 6,600 by the end of the recent quarter.

While navigating macroeconomic uncertainty and interest rate volatility, Pulte reported mixed financial results. Orders increased across all buyer groups, but revenue fell 11.6% year-over-year and average sales prices also declined. Margins remained resilient during the period. Additionally, the company finished the quarter with 1.3 finished spec homes per community, landing within its target range of 1.0 to 1.5.

Product mix remains a focus, particularly for the higher-margin Del Webb active adult communities. Orders in the active adult segment rose 12% in the quarter, outpacing growth among first-time and move-up buyers. By the quarter’s end, active adult buyers represented 25% of net new orders, while first-time buyers accounted for 39% and move-up buyers for 36%.

Currently, PulteGroup shares are trading at $126.75, up 3.46% from the previous close.

What to watch

• Build-to-order mix: Monitor progress toward the 60% BTO and 40% spec target expected next year.
• Production inventory: Watch for further reductions in spec homes in production following the drop to 6,600.
• Order growth: Continued performance of the active adult segment relative to other buyer categories.
• Cycle times: Sustained build cycle times around the 100-day mark.

Source: original release