Smith Douglas Homes reported a rise in both orders and backlog for the third quarter, even as profit margins tightened amid a strained housing market.
The builder closed 831 homes, a 5% increase from the prior year. Closing revenue edged up 0.2% to $262.5 million, while the average sale price slipped to about $316,000 from $333,000 a year earlier.
New orders climbed 13% to 777 contracts, valued at $246.1 million. The average price of these orders fell to roughly $317,000, down from $336,000. The cancellation rate held steady at 11.3%, barely above the 11.2% recorded last year.
Backlog expanded 25% year over year, reaching 947 homes with a contract value of $305.3 million at the end of September.
CEO and vice chairman Greg Bennett stated that the company continued to execute with discipline during the third quarter despite increasingly challenging housing market conditions. He noted that higher mortgage rates and affordability pressures have weighed on buyer demand and profitability, but the company’s teams remain focused on managing costs, building efficiently, and maintaining a steady absorption pace.
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Gross margin on home closings dropped to 16.3% from 21% a year earlier. Pretax income fell sharply to $3.3 million from $17.2 million, and diluted earnings per share slipped to $0.07 versus $0.24 previously.
Community presence grew, with active neighborhoods rising 15% to 113 sites, up from 98 a year ago. Controlled lots increased 2% to 24,724, including 22,693 optioned parcels.
Homes under construction reached 1,514 at quarter-end, compared with 1,098 in the same period last year. Executive vice president and CFO Russ Devendorf noted that the company’s disciplined approach to capital allocation and land investment remains particularly important in today’s operating environment. He added that the land-light model, efficient construction cycles, and a conservative balance sheet give the company flexibility to manage weaker demand while staying on track with long-term goals.
Greg Bennett and his team are working to maintain a steady absorption pace.
