NVR (NVR): Q3 profit down 27% as margin falls to 18.3%, while the order backlog rises 10%
NVR, the US homebuilder, reported third-quarter net income of $248.6m, down 27% from $342.7m a year earlier, or $89.45 per diluted share against $112.33. Its profit margin on each home fell to 18.3% from 21.0% as buyers pushed back on prices, although the number of homes sold but not yet delivered rose 10%.
What happened
On 22 October 2026 NVR published results for the three months to 30 September 2026 and filed them with the US Securities and Exchange Commission (SEC) on Form 8-K, the form used to report major events. Consolidated revenue was $2.40bn against $2.61bn a year earlier. Homebuilding revenue, the sales of houses themselves, was $2,349.3m against $2,560.3m, a fall of 8.2%. Homebuilding pre-tax income, profit before tax from building and selling homes, was $299.7m against $411.4m, down 27%. The company's mortgage arm moved the other way: its pre-tax income rose 7% to $35.0m. All figures are in US dollars and are reported under US accounting rules (GAAP), not adjusted.
The company gave two reasons for the weaker margin. The release cites "pricing pressure due to continued affordability challenges", meaning buyers struggling to afford homes at current prices and mortgage rates, and contract land deposit impairments of about $24.8m. A land deposit is money paid to a developer to secure the right to buy building lots later; an impairment is a charge taken when the company judges that deposit may not be worth what it paid. Independent coverage from EconoTimes and StockTitan's copy of the release report the same headline figures. We did not find a reliable independent source for analyst forecasts of this quarter, so we do not compare the result with expectations.
The numbers, explained
Net income fell by $94.1m (342.7 minus 248.6), or 27.5% (94.1 / 342.7); the company rounds this to 27%. Diluted earnings per share, profit divided by every share that could exist once options and similar awards are counted, fell by $22.88 (112.33 minus 89.45), or 20.4%. Profit fell faster than per-share profit because NVR has been buying back its own shares, so there are fewer shares to divide the profit among. In the quarter it repurchased 37,088 shares for $237.2m, an average of about $6,396 a share on our division (237.2m / 37,088), against 35,224 shares for $276.4m a year earlier.
Gross profit margin is the share of each sales dollar left after the direct cost of building the homes. It was 18.3% against 21.0%, a drop of 2.7 percentage points. On our rough working, 18.3% of $2,349.3m is about $430m of gross profit against about $538m (21.0% of $2,560.3m) a year ago, roughly $108m less. That is close to the $111.7m fall in pre-tax income (411.4 minus 299.7), which tells us the lower margin, not higher overhead, explains most of the drop. Prices fell too: the average price of homes delivered was $445,900 against $454,000 (down 1.8%), and the average price on new orders was $442,100 against $464,800 (down 4.9%).
Demand was softer on the front end. New orders, the homes customers signed to buy in the quarter, were 4,391 against 4,735, down 344 or 7.3%. The cancellation rate, the share of orders cancelled, rose to 21.0% from 19.4%. Settlements, homes handed over to buyers, were 5,268 against 5,639, down 6.6%. Check on revenue: 5,268 homes at $445,900 is about $2.349bn, which matches reported homebuilding revenue. Yet the backlog, homes sold but not yet delivered, was 10,121 at 30 September against 9,165, up 956 or 10.4%, with a value of $4.59bn, up 4%. Backlog value grew less than units because the average backlog price fell to $453,000 from $479,500.
Over nine months the picture is similar but starker. Net income was $683.4m against $976.0m (down 30%), earnings per share $240.54 against $315.33 (down 23.7%), and revenue $6.61bn, down 13%. New orders for nine months rose 3.6% to 16,014 from 15,459, while settlements fell 11.7% to 14,341 from 16,247. So customers are still signing, but at lower prices and with fewer homes handed over than last year.
Why it matters
NVR sells houses in the United States and also arranges mortgages for its buyers. Its profit depends on the gap between the price a buyer pays and the cost of land, materials and labour. This quarter that gap narrowed because buyers resisted prices when monthly mortgage payments are high. The company's mortgage arm helps a little: its capture rate, the share of NVR's buyers who use its own lender, was 85% against 86%, but loan production fell 10.4% to $1.38bn (from $1.54bn) as fewer homes were delivered. This is background about the business rather than a point from the release: NVR is known for building homes it has already sold and for controlling land through contracts with deposits instead of owning large amounts of land, which is why the release talks about deposits.
For the wider sector, the result is a data point on how far affordability is limiting builders. A 21.0% cancellation rate means about one in five contracts did not reach delivery. A bigger backlog is a positive sign for future deliveries, but backlog is not profit: the homes in it were sold at an average of $453,000, below the $479,500 of a year ago, and orders can still be cancelled. For ordinary readers, the figures show that builders were still selling homes but giving up some margin to do it. We do not draw conclusions beyond that, and none of this is a forecast.
What to watch next
NVR's next quarterly results will cover the fourth quarter and full year of 2026; we have not confirmed a date, and the company usually reports after the quarter ends. Further items to follow are whether the cancellation rate, now 21.0%, stays above last year's 19.4%, whether the average price of new orders ($442,100) stabilises, and whether the $24.8m of land deposit impairments recurs. The company's quarterly 10-Q filing with the SEC will give more detail on its land commitments and share repurchases. Analyst estimates are not included here because we could not verify them.
- Backlog: homes sold but not yet delivered to the buyer
- Gross profit margin: the share of sales left after the direct cost of building the homes
- Cancellation rate: the share of signed orders that are cancelled
- Impairment: a charge booked when an asset is judged to be worth less than was paid
Sources
More on NVR (NVR) · Consumer & Retail takes
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