United Homes Stock Slips Post Q2 Earnings Despite Higher Margins
UHG's Financial Performance Snapshot
For the second quarter of 2025, UHG posted revenues of $105.5 million, down 3.6% from $109.4 million in the prior-year period, reflecting a 10.1% decline in home closings to 303 units from 337. The average sales price rose 2.3% to $349,000 from $341,000, partially offsetting volume weakness. Gross margin improved 100 basis points year over year to 18.9% from 17.9%, aided by cost efficiencies and higher-margin redesigned floor plans. Adjusted gross margin in second-quarter 2025 increased to 21.3% from 20.9%.
However, United Homes incurred a net loss of $6.3 million, or $0.11 per share, against a net income of $28.6 million, or $0.50 per share, a year earlier, primarily due to a $6.2 million non-cash fair value adjustment related to contingent earn-out liabilities. Adjusted EBITDA came in at $7.2 million, down 5.5% from $7.7 million in the year-ago quarter, with an adjusted EBITDA margin of 6.9%.
United Homes' Other Key Business Metrics
Net new orders for the quarter fell 5.9% year over year to 304 homes from 323, with declines in most markets except the Upstate and Rosewood regions, where net new orders grew 26% and 78%, respectively. Raleigh saw a 20% drop in net new orders, though closings in the market increased 13%. Segmental closings also varied — Rosewood saw a 100% increase in closings, while Midlands and Upstate closings dropped 17% and 14%, respectively. Backlog as of June 30, 2025, stood at 202 homes valued at approximately $74.9 million compared with 248 valued at approximately $85.7 million a year earlier.
Available liquidity totaled $95.2 million as of June 30, 2025, including $36.5 million in cash and $58.7 million in unused credit capacity.
United Homes Group, Inc. Price, Consensus and EPS Surprise
United Homes Group, Inc. price-consensus-eps-surprise-chart | United Homes Group, Inc. Quote
UHG's Management Commentary
CEO Jack Micenko highlighted the continued positive impact of United Homes' refreshed product initiative, which has not only boosted sales pace but also enhanced profitability, with refreshed home gross margins trending about 300 basis points above legacy designs. The company also maintained a focus on affordability, pricing its homes significantly below the U.S. median and average new home prices. CFO Keith Feldman emphasized the 270-basis-point sequential improvement in gross margin, attributing it to product mix and cost-saving measures.
Factors Influencing United Homes' Headline Numbers
Revenue decline stemmed from lower unit volumes, driven partly by a 10.1% drop in average community count and market conditions marked by high mortgage rates and affordability challenges. The average sales price increase and gross margin expansion were supported by the rollout of redesigned floor plans and direct construction cost savings from United Homes' rebidding initiative. Operating expenses, while slightly lower in dollar terms year over year, remained elevated as a percentage of revenue due to reduced top-line performance.
UHG's Guidance
While no formal numeric guidance was issued, management expressed confidence in further margin gains in 2025 compared to 2024, citing ongoing product enhancements, new community openings in the second half of the year and disciplined land acquisition strategies.
United Homes' Other Developments
On May 19, 2025, UHG's board of directors announced the initiation of a strategic review process to explore options including a sale of the company, asset sales or refinancing existing debt to maximize shareholder value. The process remains ongoing, with no definitive outcome or timeline disclosed.
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