A recovery in demand for new homes helped drive strong second quarter results for LGI Homes, headlined by a 37.5% year-over-year increase in home closings in the quarter.
“Driving our performance was the strength of our backlog coming into the second quarter and our ongoing success at connecting motivated, qualified buyers with our highly trained sales teams,” chairman and CEO Eric Lipar said.
In addition to significant gains in home closings, LGI Homes reported a 124.2% year-over-year increase in net orders to 4,156. The home builder’s average selling price decreased 2.4% to $348,042 in the quarter, largely due to LGI Homes’ strategic decision to start smaller square footage homes to help increase home buyer affordability.
“We expect our continued focus on increasing affordability to drive additional benefits in the coming quarters as more of these smaller homes become available,” Lipar said.
LGI Homes generated $645.3 million in revenue from home closings in the second quarter and recorded a quarterly net income of $53.1 million, or $2.25 profits per share.
Lipar said the company focused on increasing profitability during the quarter, a strategy reflected by much-improved gross margins. In the second quarter, LGI Homes’ gross margin and adjusted gross margin improved 170 basis points sequentially to 22% and 23.8%, respectively. Lipar said the sequential improvement helped return profitability metrics “back to historical levels.”
At the end of the second quarter, LGI Homes owned or controlled 69,226 lots. The home builder owned 56,773 lots, of which 43,762 were raw/under development lots and 13,001 were finished lots. Finished lots included 1,124 completed homes, including information centers, and 3,027 homes in progress. Lipar said the company anticipates 115 to 125 active communities at year-end, with an additional 20% to 30% growth in community count in 2024.
“Demand trends remain positive, and our performance year to date provides us with significant momentum as we pursue our goals and objectives for 2023,” Lipar said. “We are proud of our second quarter results and enter the second half of the year well positioned with a clear focus on driving growth, improving profitability, and continuing to create long-term value for our shareholders.”
