PulteGroup, Inc. (PHM) reported fourth-quarter results Thursday that beat Wall Street's expectations, though the homebuilder's CEO struck a cautious tone about demand trends even as affordability conditions improve.

The company posted net income of $502 million, or $2.56 per share, while adjusted earnings per share of $2.88 came in ahead of the $2.81 analyst estimate. Revenue of $4.611 billion exceeded expectations of $4.322 billion, though it declined from $4.922 billion in the prior-year period.

Homebuilding revenue totaled $4.517 billion compared with $4.807 billion a year earlier, with home sale revenues specifically coming in at $4.478 billion versus $4.708 billion. The company closed on 7,821 homes during the quarter, down 3%, at an average selling price of $573,000, which declined 1% year-over-year.

Land sale and other revenues took a meaningful hit, falling to $39.4 million from $99.1 million in the prior year.

Margins were under pressure in the quarter. Reported home sale gross margin came in at 24.7%, including $35 million in land impairment charges that knocked 80 basis points off the figure. That compares to a 27.5% margin in the prior year.

Homebuilding selling, general and administrative expenses were $389 million, or 8.7% of home sale revenues. This figure includes a $34 million insurance benefit recorded during the period. The prior year's SG&A was $196 million, or 4.2% of revenues, which included a much larger $255 million insurance benefit.

Orders Show Modest Growth

On a brighter note, net new orders increased 4% to 6,428 homes, with an order value of $3.5 billion that PulteGroup said was comparable with the prior year. The average community count rose 6% to 1,014, and backlog ended the quarter at 8,495 homes valued at $5.3 billion.

The Financial Services segment saw revenue decline to $93.4 million from $115.1 million in the prior year, with pre-tax income of $35 million compared to $51 million. The mortgage capture rate slipped to 84% from 86%, while mortgage originations totaled 4,940 versus 5,328, with origination principal of $2.144 billion compared to $2.342 billion.

Aggressive Capital Returns

PulteGroup repurchased 2.4 million shares for $300 million during the fourth quarter. For the full year, the company bought back 10.6 million shares—representing 5.2% of shares outstanding—for $1.2 billion, or an average price of $112.76 per share. The company also invested $1.4 billion in land acquisition and development during the quarter.

The balance sheet remains solid. PulteGroup ended the quarter with $1.981 billion in cash and equivalents plus $27.9 million of restricted cash. Notes payable totaled $1.631 billion, and Financial Services debt came to $532.3 million. The company reported a debt-to-capital ratio of 11.2% and a net debt-to-capital ratio of negative 3.0%.

Full-Year Performance and Management Commentary

For the full year ended December 31, 2025, net income was $2.219 billion, or $11.12 per diluted share, compared with $3.083 billion, or $14.69 per share, in 2024. Total revenues were $17.312 billion, down from $17.947 billion a year earlier. Net cash provided by operating activities improved to $1.871 billion from $1.681 billion.

CEO Ryan Marshall acknowledged the mixed signals in the housing market. "While lower interest rates and more favorable pricing dynamics have worked to improve the overall affordability of new homes relative to a year ago, lagging consumer confidence continued to weigh on homebuyer demand in the quarter," Marshall said.

He added that the company is staying focused on execution in this environment: "Given these market dynamics, we remain focused on intelligently turning our assets, generating strong cash flows, and further developing a land pipeline that can routinely support community count growth of 3% to 5% annually."

PHM Price Action: PulteGroup shares were up 3.96% at $123.27 at the time of publication on Thursday.