Challenging market conditions persisted in the fiscal fourth quarter for Beazer Homes, resulting in declines in orders and closings in both the quarter and full fiscal year. Consumer confidence continues to hamper demand and incentives remain an important element of the sales equation.
“Conversion and sales paces remain well below historical norms, and aggressive incentives and move-in-ready specs are still required to sell homes,” CEO Allan Merrill said during the builder’s quarterly earnings call. “However, we are encouraged by the recent decrease in the month’s supply of new homes and the improvement in affordability arising from wage growth and lower mortgage rates.”
While Beazer is optimistic the market will return to more balanced supply and demand dynamics in 2026, the builder believes the short-term will be defined by incentives and high levels of competition. Merrill said the energy efficiency element of the Beazer Homes offering can differentiate the builder in a sea of mortgage rate buydowns and simplified demand packages.
“Our entire industry seems to use some version of the same affordability playbook. Higher purchase incentives, smaller square footage, and fewer features all help buyers attain homeownership,” Merrill said. “[But] they don’t excite homebuyers and they don’t address all the costs that are straining affordability.”
“At Beazer, we are focused on the total cost of homeownership. By offering lower mortgage rates, through competition and elimination of the middleman, lower utility bills from dramatically more efficient homes, and lower insurance premiums through competition and advanced building practices,” he continued.
During the earnings call, Merrill highlighted a home closed in the Atlanta metro that can deliver an estimated savings of $3,000 per year compared to comparable new homes, representing nearly $50,000 in additional value for buyers.
“As America’s No. 1 energy efficient homebuilder, we are uniquely positioned to offer a compelling, multi-faceted approach to lowering the total cost of homeownership and addressing affordability concerns,” Merrill said.
In a cost-challenged environment, Beazer Homes also made strides to lower its input costs during the quarter. Merrill said as the result of rebid material and labor costs the company realized savings of approximately $10,000 per home.
“In the fourth quarter, we [also] completed a reduction in force. A painful but necessary reflection of the current environment,” Merrill said. “This resulted in run rate savings of about $12 million per year. And we made product and sales leadership changes in several divisions, including Houston and San Antonio.”
Results By the Numbers
- In the fourth quarter, Beazer Homes reported revenue of $750.8 billion, down 4.2%, on a 1.9% increase in average sales price to $534,000, offset by a 6.0% decrease in closings to 1,406. For the full fiscal year, revenue increased 0.4% to $2.30 billion while closings declined 0.5% to 4,427.
- Orders in the fourth quarter declined 2.9% to 999 in the fourth quarter. In the full fiscal year, orders declined 7.8% to 3,890.
- Beazer ended the fiscal year with 945 units in backlog and 25,660 controlled lots. In the full fiscal year, Beazer’s land acquisition and development spending declined 11.9% to $684.0 million
- The company generated a fourth quarter profit of $30.0 million, or $1.02 per share, down from $52.1 million, or $1.69 per share, in the fourth quarter of 2024. For the full fiscal year, Beazer generated a profit of $45.6 million, or $1.52 per share, down from $140.2 million, or $4.53 per share, in fiscal 2024.
