While seasonality and high interest rates impacted traffic in the latter weeks of the third quarter, United Homes Group recorded net new order growth of 55% on a year-over-year basis.
“Despite recent volatility in rates, we still believe there are attractive opportunities for home builders due to a massive supply shortage in the home market,” United Homes Group CEO Michael Nieri said.
The 48th-largest company on the 2023 BUILDER 100 list posted third quarter profits of $150.8 million, or $2.35 per share, compared with $15.7 million, or $0.40 per share, in the second quarter of 2022. The company’s first earnings report as a public company was in the first quarter of 2023.
Third quarter revenues were $87.7 million on 283 closed homes, compared with $111 million on 343 closed homes in the prior-year period. Net new-home orders in the third quarter were 272, compared with 175 in the third quarter of 2022. The average sales price of production-built homes was $316,000 in the quarter, essentially flat compared with the prior-year period.
Chief operating officer Shelton Twine said the builder experienced continued improvement in building conditions in the third quarter, with a cycle time improvement of 33 days on a sequential basis.
“Supply chain conditions have improved materially from last year, leading to better labor and material availability and easing of cost pressures,” Twine said during the home builder’s earnings call. “We believe we can get back to pre-COVID build times in the next two to three months.”
Twine said the use of incentives will likely remain elevated in the fourth quarter as United Homes Group strives to hit its year-end delivery goals.
“Our ability to buy down mortgage rates for our buyers is a competitive advantage versus both the existing for-sale market and smaller private competitors,” president Jack Micenko said. “With a strong fundamental backdrop, a proven and scalable operating model, and a seasoned leadership team, United Homes Group is well positioned to achieve its long-term goal of becoming a significant player in key home building markets throughout the Southeast.”
M&A Growth
In the third quarter, United Homes Group completed the acquisitions of Herring Homes in the Raleigh, North Caroina, market and Rosewood Communities in upstate South Carolina. Nieri said the company remains focused on additional strategic opportunities that meet United Homes Group’s underwriting criteria and fit the “organizational framework” of the company.
“Our goal is to grow our highly profitable, returns-focused business model across the Southeast through organic growth and accretive acquisitions of private builders,” said Micenko. “The company has a track record of building affordable homes in South Carolina and Georgia, and we believe this success can be replicated in a number of other markets.”
