LGI 홈즈(LGIH) 2026년 3분기 실적 발표 콜: 주문 감소 속 매출 증가

LGI 홈즈(LGI Homes, NASDAQ: LGIH)는 단지 수 증가, 도매 활동, 영업비용 절감에 힘입어 2026년 3분기 인도 실적, 매출 및 이익이 증가했다고 발표했습니다. 그러나 높은 모기지 금리와 주택 가격 부담으로 인해 순주문이 급감하고 계약 취소가 증가했습니다.

핵심 요약

• 3분기 인도 실적은 전년 동기 대비 10.4% 증가한 1,222채를 기록하며, 총매출을 10.2% 증가한 4억 4,450만 달러로 이끌었습니다.
• 순이익은 2,460만 달러로 24.6% 증가했으며, 희석 EPS는 0.85달러에서 1.05달러로 증가했습니다.
• 주택 건설 총마진은 20.2%를 기록했으며, 조정 주택 건설 총마진은 23.7%에 달했습니다. 두 지표 모두 전분기 대비 40bp 개선되었습니다.
• 주택 구매력 악화로 순주문은 609채로 61.2% 감소했습니다. 계약 취소율은 전년 동기 33.6%에서 53.8%로 상승했습니다.
• LGI 홈즈는 연간 인도 실적 가이던스를 4,600~4,800채로 축소하는 한편, 가격 설정, 마진, 비용 및 단지 수 전망은 재확인했습니다.
• 경영진은 2026년 3분기 말 기준 151개였던 활성 단지 수가 2027년 말까지 180개 이상으로 늘어날 것으로 예상하고 있습니다. 필요한 자금의 상당 부분은 이미 투입되었습니다.

주요 재무 실적

사업 및 영업 성과

LGI 홈즈는 전년 동기 대비 7% 이상 증가한 151개의 활성 단지로 분기를 마감했습니다. 단지당 월평균 인도 실적은 2.6채였습니다. 애틀랜타가 단지당 월평균 7.3채로 선두를 차지했고, 샬럿이 3.7채, 오스틴이 3.6채로 뒤를 이었습니다.

회사는 생애 첫 주택 구매자를 위한 즉시 입주 가능한 선시공 후분양(speculative) 주택을 계속해서 강조했습니다. 경영진은 이 모델이 특히 임대 계약 만료를 앞둔 구매자들에게 가격, 월 납부금 및 입주 시기에 대한 더 큰 확실성을 제공한다고 밝혔습니다.

비용 통제가 실적 성장을 뒷받침했습니다. 총매출이 10% 이상 증가했음에도 불구하고 판매비 및 관리비는 절대 금액 기준으로 2.5% 감소했습니다. 일반 관리비는 2,630만 달러로 전년 동기 대비 6%, 전분기 대비 8% 감소했습니다.

LGI 홈즈는 이번 분기에 1,205채의 주택 착공에 들어갔으며, 9월 말 기준 건설 중인 주택은 1,626채를 기록했습니다. 부동산 재고자산 투자는 주로 완공 주택 재고가 23.3% 감소한 데 힘입어 전년 동기 대비 1억 6,000만 달러 감소했습니다. 회사는 3분기 중 재고자산 감액 손실을 기록하지 않았습니다.

재무제표 역시 개선되었습니다. LGI 홈즈는 회전한도 대출에서 3,600만 달러 이상을 상환하고 분기 말 채무 총액 15억 4,000만 달러를 기록했습니다. 자본 대비 순부채 비율은 전년 동기 대비 420bp 하락한 40.6%로 감소했습니다. 유동성은 현금 6,940만 달러와 회전한도 대출 가능 잔액 3억 7,830만 달러를 포함해 총 4억 4,770만 달러를 기록했습니다.

경영진 가이던스

경영진은 2026년 연간 인도 실적 가이던스를 4,600~4,800채로 축소했습니다. 조정된 범위는 현재 수주 잔고, 인도 가능한 재고량, 그리고 남은 연도 동안의 판매 및 취소 예상치를 반영합니다.

회사는 연간 전망의 나머지 항목을 재확인했습니다:

• 평균 판매 가격: $360,000~$370,000
• 매출 대비 판매비 및 관리비 비율: 15%~16%
• 주택 건설 총마진: 19%~21%
• 조정 주택 건설 총마진: 22.5%~24.5%
• 연말 기준 활성 단지 수: 150~160개

경영진은 4분기 총마진이 3분기와 유사할 것으로 예상하지만, 최종 결과는 부분적으로 향후 완료될 판매와 인도 실적 중 도매 비중에 따라 달라질 것입니다.

향후 전망에 대해 LGI 홈즈는 예상되는 단지 분양 완료를 포함한 순 단지 수 기준으로 2027년 말까지 180개 이상의 활성 단지를 운영할 것으로 예상합니다. 경영진은 신규 오픈이 연중 비교적 균등하게 분배될 것이며 텍사스, 캘리포니아, 애틀랜타에서 두드러진 확장이 있을 것이라고 말했습니다. 이 전망에는 추가 완공 부지 구매 및 잠재적 M&A는 제외되어 있습니다.

리스크 및 주요 관전 포인트

주택 구매력 부담은 단기적으로 가장 큰 압박 요인으로 남아 있습니다. 경영진은 구매자들이 월 납부금에 집중하고 있으며, 높은 금리로 인해 자격을 갖춘 고객 층이 줄어들었다고 말했습니다. 일부 구매자는 소득 증빙, 기존 주택 매각 또는 계약금 마련을 위해 더 많은 시간이 필요하다고 덧붙였습니다.

계약 취소율은 53.8%로 상승했으며, 이는 주택 구매력 부담, 판매 활동 둔화 및 광범위한 판매 깔때기(sales funnel) 영향 때문입니다. 판매 흡수율 하락 역시 대규모 토지 개발 프로젝트의 자기자본이익률(ROE)에 영향을 미치고 있으나, 경영진은 총마진 수준에 대해 여전히 긍정적인 입장을 유지하고 있습니다.

LGI 홈즈는 수요를 지원하기 위해 마감 비용 지원, 모기지 금리 인하(buydowns) 및 선도 금리 약정을 활용하고 있습니다. 경영진은 인센티브가 단지별로 결정될 것이며 단지 물량을 늘리기 위해 마진을 희생할 의도는 없음을 강조했습니다.

애널리스트 Q&A 하이라이트

경영진은 최근 수준과 유사한 판매 속도라면 연간 인도 실적 가이던스 하한선에 도달하기에 충분할 것이라고 밝혔습니다. 자금 확인 조건에 따라 10월에는 약 300채의 주택이 인도될 것으로 예상되었습니다.

단지 확장과 관련하여 경영진은 2027년 말까지 180개 이상의 활성 단지 목표가 순증 기준이라고 설명했습니다. 선행 인프라 및 개발 지출의 상당 부분이 이미 재무제표에 반영되어 있어 해당 단지 오픈만을 위한 추가 부채 발생 없이 확장이 가능할 것입니다.

경영진은 일부 경쟁사가 선시공 후분양 비중 축소를 논의하는 중에도 생애 첫 주택 구매자를 위한 선시공 후분양 재고에 대한 신뢰를 다시 한번 강조했습니다. 신규 단지의 가격대는 기존 포트폴리오와 전반적으로 유사할 것으로 예상되며 현재 흡수율과 마진을 바탕으로 언더라이팅이 진행되고 있습니다.

상반기 동안 활동이 미미했던 단독주택 임대(SFR) 매수자들의 참여가 재개되었습니다. 경영진은 논의가 매수-매도 호가 차이(bid-ask spread)를 줄이는 데 집중되어 있다고 전했습니다.

실적 발표 설명회 전문(Full Transcript)

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Welcome to the LGI Homes Third Quarter 2026 Conference Call. Today's call is being recorded, and a replay will be available on the company's website at www.lgihomes.com. After management Prepared comments, there will be an opportunity to ask questions. At this time, I'll turn the call over to Joshua Fattor, Executive Vice President of Finance and Capital Markets.

Joshua Fattor

Thanks, Sonia, and good afternoon. I'll remind listeners that this call contains forward-looking statements, including management's views on the company's business strategy, outlook, plans, objectives and guidance for future periods. Such statements reflect management's current expectations and involve assumptions and estimates that are subject to risks and uncertainties that could cause those expectations to prove to be incorrect. To review our filings with the SEC for a discussion of the risks, uncertainties and other factors that could cause actual results to differ from those presented today. All forward-looking statements must be considered in light of those related risks, and you shouldn't place undue reliance on such statements, which reflect management's current views and are not guarantees of future performance.

On this call, we'll discuss non-GAAP financial measures. These measures are not intended to be considered in isolation or a substitute for financial information presented in accordance with GAAP. We Reconciliations of non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be found in the press release we issued this morning and in our quarterly report on Form 10-Q for the period ended September 30, 2026, and which will be filed with the SEC today. This filing will be accessible on the SEC's website and on the Investor Relations section of our website.

I'm here today by Eric Lipar, LGI Homes' Chief Executive Officer and Chairman of the Board; and Charles Merdian, Chief Financial Officer and Treasurer. I'll now turn the call over to Eric.

Eric Lipar

Thanks, Josh. Good afternoon, and thank you for joining us. During the third quarter, our team continued to execute well in today's highly competitive housing market where affordability is stretched. We closings, total revenue and homebuilding revenue compared to last year while maintaining strong profitability, expanding our community count and strengthening our balance sheet. We delivered 1,222 homes in the quarter, up over 10% from the prior year. Year-to-date, we delivered 3,578 homes, up over 4% compared to last year.

Our average selling price was $368,000, down slightly from the prior year primarily due to wholesale closings and geographic mix. Because of higher closings, homebuilding revenue and total revenue each increased 10% over the prior year. Profitability remained strong throughout the quarter. Our on-balance sheet predominantly owned land strategy, together with our in-house development capabilities reflects the long-term decisions we've made to set LGI apart from much of the industry. It remains a competitive advantage, generating strong margins while giving us flexibility to adapt to changing market conditions.

Homebuilding gross margin was 20.2%, and adjusted homebuilding gross margin was 23.7%. Both were up 40 basis points over the prior quarter in addition to being above the midpoint of the full year ranges we raised in August. Additionally, adjusted homebuilding gross profit dollars increased nearly 7% compared to last year reflecting higher closings, higher revenue and our continued focus on balancing profitability and affordability. Our team did an excellent job managing costs while continuing to support future growth.

SG&A expenses declined in absolute dollars from the prior year and improved 180 basis points relative to revenue. These results reflect the benefits of our scale, disciplined cost management and focus on operating efficiency across the business. Community growth is a key driver of our results and an important part of our long-term strategy. In August, we reached an all-time high of 153 active communities, and we ended the quarter with 151, an increase of over 7% compared to last year. That increase helped drive our year-over-year growth in closings and revenue and remains 1 of the best indicators of future growth because it expands our ability to serve more customers and increase earnings over time.

During the quarter, we averaged 2.6 home closings per community per month. Our top markets by closings per community were Atlanta at 7.3%, Charlotte at 3.7 and Austin at 3.6, Fort Pierce in Southern California, each at 3.4 closings per community per month. These markets reflect strong execution by our local teams across both our retail and wholesale channels and our focus on delivering value to our buyers. We also continue to strengthen our balance sheet.

During the quarter, we paid down over $36 million on our credit facility and reduced our net debt-to-capital ratio by 100 basis points sequentially, bringing the total reduction to 420 basis points over the last year. In October, we completed an amendment and extension of our revolving credit facility, which extends key lender support through 2030. Josh will cover more details later in the call.

As expected, the market became more challenging as the quarter progressed and affordability remained in the defining story of the quarter. Net orders were 609 homes, down from 1,570 homes last year. Our buyers make purchasing decisions based on the monthly payment, so affordability is always front and center. At today's payments, a smaller pool of buyers can qualify and those who do often need time to verify income sell their existing home or save for their down payment.

We remain confident in the long-term desire for homeownership. Our focus is on balancing sales pace and profitability, and we are committed to doing both. -- to make homeownership attainable to the largest pool of buyers, we are leaning into incentives across our regions, including closing cost assistance, buydowns and forward rate commitments. We'll use these tools with discipline, but we won't give up margins simply to chase volume. We also see a growing competitive advantage in our spec home model.

As other builders move away from the spec business, we're well positioned with move-in ready homes that give buyers certainty on price, payment and timing and our scale and in-house development capabilities allow us to keep delivering them at profitable margins. Through our direct-to-consumer model, we work closely with buyers throughout the home buying journey, and we expect many of them to close over time. Some buyers work with our teams for months to get through the process and enter their new home. We continue to see interest in homeownership and our job is to remain disciplined while adapting our sales and financing strategies, production plans and product offering to current conditions. While affordability matters, we are not simply stripping features from our home prices.

We continue to deliver high-quality homes with strong fit and finish, backed by best-in-class customer service from interaction through closing and beyond. We believe this commitment contributes to high customer satisfaction, low warranty costs and long-term value for customers and shareholders alike. We're also placing renewed emphasis on the experience beyond the home itself from the moment you arrive at one of our communities to the green space, amenddies and walkability that make it a place to call home.

We're pleased with the financial results we delivered in the third quarter, and we are focused on achieving our full year closings objective while maintaining strong profitability in this challenging environment.

With that, I'll turn the call over to Charles to discuss our financial results in greater detail.

Charles Merdian

Thank you, Eric, and good afternoon. Our third quarter results reflect strong operating execution. Growth in closings, revenue and earnings, along with meaningful margin and cost improvements demonstrate the strength of our model even as higher interest rates weighed on current period orders. We delivered a total of 1,222 homes in the quarter, an increase of 10.4% compared to last year. Of these homes, 1,189 were new homes, an increase of 11.6% from last year. The remaining 33 closings were currently or previously leased homes, the gains from which were reflected in other income.

Homebuilding revenue was $437.5 million at an average sales price of $367,962, including a combined $7 million from lot sales and leasing operations, total revenue was $444.5 million an increase of 10.2%. Wholesale revenue during the quarter was $80.8 million, up 48.3% from $54.5 million in the same period last year. Our third quarter homebuilding gross margin was 20.2%, and adjusted homebuilding gross margin was 23.7%, both above the midpoint of the full year ranges we raised in August and both up 40 basis points compared to the prior quarter.

Adjusted homebuilding gross margin excludes $14.7 million of capitalized interest and $449,000 related to purchase account. Cost discipline was a continuing theme during the quarter. Combined selling, general and administrative expenses totaled $62.1 million, 14% of total revenue a 180 basis point improvement over the prior year. Our ongoing initiatives allowed us to grow total revenue more than 10% while reducing SG&A expenses by 2.5% in absolute dollars.

Selling expenses were $35.8 million or 8% of total revenue, down 80 basis points from the same period last year. The improvement was primarily due to higher revenue and lower operating costs partially offset by higher commissions and increased spending on advertising to drive leads. General and administrative expenses were $26.3 million, a decrease of 6% year-over-year and 8% sequentially. The decrease is primarily due to ongoing efficiency initiatives. As a percentage of revenue, G&A expenses decreased 100 basis points to 5.9% compared to the same period last year. Other income was $6.2 million, driven primarily by income from our joint ventures and gains on the sale of currently or previously leased homes.

Adjusted EBITDA totaled $52.7 million or 11.9% of total revenue, up 150 basis points year-over-year and 50 basis points sequentially. Pretax income was $33.3 million or 7.5% of total revenue and net income was $24.6 million, up 24.6% year-over-year and we delivered $1.05 per basic and diluted share compared to $0.85 last year. Net orders in the third quarter were 609 homes down 61.2% from 1,570 homes during the same period last year. The year-over-year decline reflects the increase in affordability pressures during the quarter compounded by the significant strength in sales activity during the third quarter of last year.

Our cancellation rate was 53.8% compared to 33.6% last year. And as we've discussed on prior calls, the elevated cancellation rate reflects ongoing affordability pressures, the timing effect of slower sales activity this quarter compared to the prior quarter and a broader sales funnel as we work to generate incremental orders. We ended the quarter with 685 homes in backlog valued at $273.7 million, representing decreases of 47.5% and 45.1%, respectively.

Turning to our land position. Our land strategy continues to emphasize flexibility. As of September 30, total owned and controlled blocks were 58,400 down 6.7% year-over-year and up 1.7% sequentially. Our owned lot position declined for the sixth consecutive quarter to 50,270, down from a peak of 61,893 in the second quarter of 2022. Control blocks increased 18.1% sequentially to 8,130 as we identified more attractive land opportunities, including finished lot deals available on takedowns and smaller projects that meet our underwriting criteria at today's absorption levels.

In total, dollars invested in real estate inventory decreased $160 million year-over-year, primarily due to a 23.3% reduction in the number of completed homes reflecting active inventory management and balanced home starts. We recorded no inventory impairments during the third quarter. We continue to evaluate our communities each quarter based on sales pace, pricing, incentives, margins and other relevant market conditions. And based on these assessments, the values remain in line with the amounts carried on our balance sheet.

The primary reason for this is our lot basis. Most of our land is self-developed and was acquired selectively. Of our owned lots, 34,119 or approximately 2/3 are in raw earned under development, and 79% of those are in engineering or held as undeveloped land where little capital is invested. A significant proportion of our inventory dollars are concentrated in the lots closest to sale. For example, completed homes and homes under construction make up just 7.5% of our own blocks but 28% of our $3.5 billion of inventory.

Of the remaining 16,151 owned lots, 12,378 were finished vacant lots, and 2,147 were related to completed homes and information centers. We started 1,205 homes in the third quarter and finished September with 1,626 homes under construction.

I'll now turn the call over to Josh for a discussion of our capital position.

Joshua Fattor

Thanks, Charles. Our capital position continued to strengthen during the quarter, supported by debt reduction, improved leverage metrics and the recast of our revolving credit facility. We ended the quarter with $1.54 billion of debt outstanding, including $411 million drawn on our revolver. As Eric highlighted, our debt-to-capital ratio decreased to 41.7% and our net debt-to-capital ratio was 40.6%. Compared to the same time last year, our net debt to capital ratio was down 420 basis points, further strengthening our balance sheet and enhancing our flexibility to opportunistically pursue when and other strategic investments that we believe will drive future shareholder value.

The recent amendment and extension of our revolving credit facility established total commitments of approximately $1.2 billion and extended key lender support through October of 2030. -- following the amendments, approximately $96 million of commitments mature in 2028, $215 million mature in 2029, and the remaining $855 million are now committed through 2030. Along with extending the duration, the amendment also improved the facility through several favorable borrowing base and covenant changes. Most notably, it brings our interest coverage covenant in line with current market terms. This more flexible framework enhances the overall utility of the facility to support our long-term strategy, while maintaining our disciplined approach to balance sheet management.

We ended the quarter with $447.7 million of liquidity, including $69.4 million of cash on hand and $378.3 million available to borrow on our facility. As of September 30, our stockholders' equity was approximately $2.2 billion and book value per share was $92.84.

At this point, I'll turn the call back over to Eric.

Eric Lipar

Thanks, Josh. We're pleased with our financial performance this quarter and remain confident in our ability to navigate the current market. Buyers continue to inquire by homeownership and engage with our sales teams even with mortgage rates still at elevated levels. Our focus remains on maintaining profitability, balance sheet strength, disciplined capital allocation and growing our community count, while helping more families achieve the dream of homeownership as we close out the year. Pending verification of fundings, we expect to announce that we closed approximately 300 homes in October. Based on these latest results, we are narrowing our full year closing guidance to between 4,600 and 4,800 homes. The revised range reflects the closings currently in backlog, our inventory available to close and our current expectations for sales and cancellation activity during the balance of the year.

Outside of closings, we are reaffirming the rest of our full year guidance. We continue to expect full year average selling price to range between $360,000 and $370,000 and as a percentage of revenue between 15% and 16%, homebuilding gross margin between 19% and 21% and and adjusted homebuilding gross margin between 22.5% and 24.5%. We continue to expect to end the year with 150 to 160 active communities. Looking further out, based on our current view of the communities we expect to open over the next year, we expect to be active in more than 180 communities by the end of 2027, an increase of approximately 20% compared to our community count today. These openings deepen our geographic footprint and expand our selling capacity, but we will continue to pace development and home starts based on market level demand and expected returns.

Much of the capital needed to support these openings has already been invested, which should allow us to grow our community count without requiring incremental debt, specifically to fund these openings. These communities were under in at today's absorption base, and we expect them to deliver similar absorptions and margins to what we're experiencing today. I'd like to recognize our employees for their continued hard work and commitment to our customers.

Earlier this quarter, LGI Homes was recognized by U.S. News and World Report as one of the best companies to work for. This recognition reflects the culture we have built over many years and the dedication of our employees across the country. Great customer experiences begin with engaged employees who take pride in their work. The quality of our homes, the experience we provide our customers and the strength of our operating performance, I'll start with our people.

As we head into the final stretch of 2026, our priorities are clear: protecting profitability, managing inventory and starts and ensuring a great customer experience. With a growing community base and experienced teams across our markets, we believe LGI Homes is well positioned to navigate current conditions and create long-term value. We'll now open the call for questions.

Operator

[Operator Instructions]

Our first question will come from the line of Trevor Allinson of Wolfe Research.

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Trevor Allinson

It's good to see you guys are maintaining your full year gross margin guidance, but the full year number does imply a pretty wide range as you get to 4Q. So can you just help us dial in that number a little more closely? How are you expecting 4Q gross margin compared to 3Q? And then how many of your roughly 1,300 4Q closings do you guys need to sell and close intra-quarter 4Q?

Eric Lipar

Yes. Thanks, Trevor. This is Eric. I can talk first about the sales. Orders, as expected, slowed in September to October closings like we talked about, or approximately $300 million. So we'll need a similar sales pace, which has been fairly slow to get the low end of our closing range, 46,00 to 4,800. So we're comfortable in that number. And I think at this point, we want to keep a wide range on gross margin. We still have sales yet to make the wholesale as a percentage of how many closings is still a little bit to be determined. But I think overall, we expect gross margins to be similar in Q4 to Q3.

Trevor Allinson

Okay. And then second question kind of around pace and price. You talked about leaning back into incentives. Clearly, orders were pressured in the quarter, but then you also mentioned protecting profitability a number of times. So how should we think about the balance there. Is there a certain absorption pace that you guys are trying to get back to -- just trying to think about what you think is the right balance of pace and price for you guys here and what is a more challenging environment with higher rates.

Eric Lipar

Yes. Great question, Trevor. I think all of us are looking at this issue. And we, like a lot of others are really looking at a community by community. Our sales pace is strong in some of our communities. And some of our communities, we like to have a stronger pace. I think overall, we have been leaving into incentives all along. And with the interest rate spike we saw over the last 60 days is just more expensive to get the same rate -- so that's what we're balancing community by community across the country.

Operator

And our next question will come from the line of Alex Regal of Texas Capital Securities.

Alexander Rygiel

A couple of quick questions here. First, for clarification, you just mentioned you could be active in 180 communities by the end of 2027. Is that sort of like the gross number or the net number? How many communities might you be closing out of such that kind of at year-end 2027, what is sort of that active community count number on a net basis?

Eric Lipar

Great question, Alex. This is Eric. I can start Charles going to add to it or Josh, if they choose to. But the 180 is I would consider a net number I don't have in front of me how many communities will be closing out, but we expect to end 2026 with between 150 and 160 active selling communities. And in 2027, we are very confident having more than 180 in active communities opening at the end of 2027. And that does not include any other finished lot opportunities we buy over the next quarter or 2, and we're starting to see more and more of those opportunities and also doesn't include any M&A that would happen over the next 12 months.

Charles Merdian

I would just add. Sorry, Alex, I'd just add, right, a lot of those we emphasized in the scripted portion, just a lot of those dollars have already been invested. So those are dollars that are sitting on our balance sheet for the vast majority of that upfront infrastructure on a lot of these projects or development deals that were purchased a few years back and are now coming to fruition. And then secondly, the cadence of those, do you see it sort of being equally weighted throughout the year? Or is there a greater weighting either in the front end or the back end of the year?

Eric Lipar

No. We think it's going to be pretty equally weighted throughout the year.

Alexander Rygiel

Perfect. And then secondly, have you seen any competitors pull back on their spec strategy? And is that what's kind of giving you increased confidence here?

Eric Lipar

Yes, Alex, this is Eric. I don't know if we've seen it in the field more so than hearing about it through the builders commentary on earnings calls, et cetera. We are very confident in the spec strategy with our customer being the first-time homebuyer, the majority of that customer base is currently paying rents, and we have found over the years from that customer is looking to inquire by homeownership is usually at the end of the lease, maybe getting out of a roommate or a parent situation. and having available homes for that customer to move into is the correct strategy in the first-time homebuyer market, and we're comfortable with that.

Operator

[Operator Instructions]

Our next question will come from the line of James McCanless of Citizens Bank.

Jay McCanless

First question, just if we could talk about the decline in orders versus last year. I mean it sounds from the outside looking in that you guys got a little more aggressive in terms of opening the funnel and just had some bad timing maybe with the higher mortgage rates hitting at the same time you were trying to increase the orders. Is that the right way to look at that?

Eric Lipar

That is Jay. Yes. Last year was a robust Q3 got aggressive underwriting orders. That strategy worked and we're still fairly aggressive today and want to have as many orders as we possibly can. But yes, last last quarter was a challenge from an orders perspective, I think somewhat as expected because of the higher rates.

Jay McCanless

Okay. All right. I just wanted to make sure we're thinking about that the right way. Second question, and you kind of talked about this earlier, Eric, but maybe could you talk about how old the current communities are that are in the field, like what percentage may of them were underwritten to the current incentives and levels and some of the pricing actions you're having to take -- just trying to get a sense of maybe 40%, 50% of the communities have been underwritten to current standards and what that might look like at that 180 communities next year.

Eric Lipar

Yes, that's a great question, Jay. We may have to handle that on a follow-up call and get some more information as far as the older age of the communities and Charles and Josh can certainly add to that. I'd say the counties we bought that are larger communities that were very heavily doing land development. We're very comfortable in the gross margin. I think the slower absorption pace really impacts return on equity. -- and the newer communities that are opening as men decount really is they're underwrote to today's gross margin and today's absorption pace and very respectful return on equity, I say.

But yes, the large land development projects -- the IRR return on equity has been impacted, but we're still very comfortable in our overall gross margin.

Charles Merdian

Jay, I think I'd add on that, some of the adjustments that we can make even though the dollars spent on acquiring the land upfront and maybe developing Section 1 and some of the upfront infrastructure have all been in place, but we've done a really good job of adjusting our future section sizes as we go through the engineering and development phase to adjust the original projected cash flows have now been paced back out, which is helping offset some of that slower absorption pace that we may have underwrote to at a higher pace.

Jay McCanless

Got it. Okay. And then the next question I had, demand from the single-family for rent community, how is that trending? And are you seeing that pick up as the 10 years come back in some from the highs we saw in mid-October?

Eric Lipar

Yes. I think it's getting better, Jay, they're all engaging with us once we got clarity, legislative clarity over the last 12 months. It was pencils down for the first half of the year. Now we're engaging with those buyers and really working through the bid-ask spread and working out orders for Q4 in 2027.

Operator

Our next question is coming from the line of Alex Barron of Housing Research Center.

Alex Barrón

Yes. I wanted to ask -- so regarding the orders and the current situation, have you guys adjusted anything since the quarter began either like in incentives or in or in pricing to try to boost your orders for the fourth quarter?

Eric Lipar

I think, Alex, a couple of things. One is we all want more orders. We are focused on making that decision community by community. We're also focused on taking a long-term approach, not rash short-term decisions with the interest rates spiking day-to-day. And the orders that are in the past, that's reflective in our adjusted guidance we have built that into our 46,00 to 4,800. And then the orders coming currently in what we sell over November, December is really going to be building on 2027, and we'll get back with everybody on our expectations -- right now, we expect it to be more of the same, 27% compared to 2026 overall.

Alex Barrón

Okay. And in terms of the new communities that you guys are rolling out to get to the $180 million -- is there anything different about them? Is there more concentration in a certain geography? Is there a lower price point or higher price point? Or are they pretty much similar to what your current portfolio?

Eric Lipar

I think from a price point, it's going to be similar. Looking at the scheduled opening quite a few in Texas, quite a few in California, quite a few in Atlanta, some of our top-performing markets where we're opening new communities and going deeper in those markets. So that probably balances out as far as ASP goes. I think the other difference is a lot of these are finished lot opportunities that we didn't necessarily develop that we're buying from developers. -- and also looking at all the communities are always looking at our product, working on improving our product, make sure the product is appropriate for the market and the community that we're going into.

Alex Barrón

Okay. At this time, I'm not showing any further questions. I would now like to turn the conference over to Eric Keeper for closing remarks.

Eric Lipar

Yes. Thanks, everyone, for participating on today's call and for your continued interest in LGI Homes. Have a great day.

Operator

And this concludes today's program. Thank you for participating. You may now disconnect.