PulteGroup cut its build cost 5%, and its margin fell anyway

What the week's housing news means for people who sell to builders.

PulteGroup built its third-quarter homes for $75 per square foot, down 5% from a year earlier, crediting procurement teams working with its trades and product suppliers, and its home-sale gross margin still fell to 24.8% from 26.2% as incentives rose to 10.4% of price. M/I Homes and NVR reported lower orders and thinner margins the same week, and Census put September new-home sales at 676,000, flat with August. Whirlpool and Simpson Manufacturing, meanwhile, reported price increases for this quarter and next year. The relief builders have already taken from suppliers and the increases suppliers have queued are likely to meet at the next agreement renewal.

PulteGroup's orders fell 6% as buyer traffic dropped 14%

Management said the slowdown continued into October. (PulteGroup Q3 release, PulteGroup Q3 call)

M/I Homes' contracts went from up 15% in July to down 16% in September

M/I attributed the margin decline to the higher cost of rate buydowns and lot costs. (M/I Homes Q3 release, M/I Homes Q3 call)

NVR's gross margin fell to 18.3% from 21.0%

NVR attributed the margin decline to higher lot costs and "pricing pressure due to continued affordability challenges and weak consumer sentiment." (NVR Q3 release)

September new-home sales held at 676,000 while builders shifted unsold stock toward homes not yet started

Census flags both sales changes as statistically indistinguishable from zero. (Census)

Treasury set an 18-month window for investors buying new build-to-rent homes

Under proposed rules for the ban on large investors buying single-family homes, which takes effect January 7, 2027, an investor controlling 350 or more homes could still buy a new home for rent if it was never owner-occupied, is purchased within 18 months of its certificate of occupancy, and is first occupied by renters; comments close November 23. (Federal Register)

Whirlpool's North American sales fell 8.3% ahead of a 7% price increase

Whirlpool said the sales decline was "driven by soft industry demand." On its call, management said builder pricing runs on annual or national contracts quoted well in advance and moves the same way as retail pricing, only later. (Whirlpool Q3 release, Whirlpool Q3 call)

Simpson's North American sales rose 3.8%, mostly on price

North American net sales were $502.0 million, "primarily due to price increases and higher unit sales volumes," with segment gross margin at 48.4% against 48.7%; management said it expects "additional pricing actions" for 2027. (Simpson Q3 release)

Watsco's residential equipment sales rose 7%, with units up 5%

Watsco attributed the margin decline in part to the mix between replacement and residential new construction and to smaller OEM price increases this year than last. (Watsco Q3 release)

Sherwin-Williams expects "muted demand" into 2027

Paint Stores Group sales rose 4.7%, with selling prices up by a mid-single-digit percentage and residential repaint up mid-single digits; the release did not address new residential. (Sherwin-Williams Q3 release)

The 30-year rate eased to 7.32%

Freddie Mac's average 30-year fixed rate fell from 7.40% to 7.32% in the week of October 22, its first weekly decline since August, after a climb from 6.71% on September 3. (Freddie Mac)

Builders have already taken price relief from their suppliers. PulteGroup's $75 per square foot is down 5% from a year ago, and management credited its national and divisional procurement teams "working with our trades and product suppliers." Zelman counted build-cost cuts of 5% to 7% at D.R. Horton, Meritage, and Lennar after the second quarter. The relief has not stopped the margin decline: PulteGroup's third-quarter gross margin has gone from 29.5% in 2023 to 28.8%, 26.2%, and now 24.8%, with incentives at 10.4% of price and starts being held back. PulteGroup's CEO told analysts that cost control "will get harder and harder" in "an inflationary environment, which we seem to clearly be back in." (PulteGroup Q3 call, PulteGroup Q3 slides, Zelman)

Supplier pricing is moving up while builder pricing lags. Whirlpool's 7% increase lands this quarter, and its management described builder price moves as following retail, later, under annual or national contracts. Owens Corning said on its August call that it had "absorbed quite a bit of inflation" in residential insulation over a couple of years without price traction, while seeing "solid realization" on increases in roofing, which it says is more than 80% repair and replacement. This week's releases from Whirlpool, Simpson, Watsco, and Sherwin-Williams give no margin by channel, so the gap between what a builder agreement earns and what replacement or repair business earns does not show up in them. (Whirlpool Q3 call, Owens Corning Q2 call)

That gap likely decides how long relief lasts. Relief given on the assumption of a recovery is likely harder to defend when PulteGroup, M/I, and NVR all reported lower gross margins than a year ago, and a manufacturer whose builder business earns well below its replacement business is more likely to put resources toward the higher-margin channel. An agreement up for renewal or RFP now may also face less appetite from supplier leadership for terms that lock in pricing for several years. The need to keep factory lines loaded and factory employment steady can work against that, and so can sharing the cost of relief with a distribution partner. How long suppliers can keep giving relief is the open question.

HUD's manufactured housing consensus committee finishes its meeting on chassis-free homes October 28, after an October 22 executive order created a HUD and FHFA task force on manufactured housing; Masco, Meritage, Century, and Green Brick report October 28, the day the Fed decides on rates; and D.R. Horton, Builders FirstSource, Carrier, and Trane report October 29. (White House, Federal Register MHCC notice)

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Compiled from publicly available reporting as of October 27, 2026. Figures are as reported by the cited sources and subject to revision. Starts & Specs is provided for general informational purposes only. Nothing in it is financial, investment, legal, or business advice, or a recommendation to take or refrain from any action; any analysis reflects the author's reading of public information and may be wrong. Readers should independently verify figures and make their own decisions.