Cuộc họp công bố kết quả kinh doanh Q3 2026 của M/I Homes (MHO): Chính sách hạ lãi suất vay mua nhà gây áp lực lên biên lợi nhuận

Thông tin trọng tâm

• M/I Homes đã công bố doanh thu quý 3/2026 đạt 1,08 tỷ USD, giảm 5% so với cùng kỳ năm trước, do số lượng bàn giao nhà và giá bán trung bình giảm.
• Lợi nhuận trước thuế giảm 38% xuống 87 triệu USD, trong khi EPS pha loãng giảm từ 3,92 USD xuống 2,56 USD. EBITDA giảm từ 157 triệu USD xuống 103 triệu USD.
• Biên lợi nhuận gộp không bao gồm 5 triệu USD chi phí dự phòng giảm giá hàng tồn kho đạt 21,3%, giảm 320 điểm cơ bản. Ban lãnh đạo cho rằng sự sụt giảm này chủ yếu do chi phí bù lãi suất thế chấp tăng cao và chi phí lô đất gia tăng.
• Số lượng hợp đồng mới giảm 2% xuống 1.861 căn nhà. Kết quả theo tháng suy yếu từ mức tăng 15% trong tháng 7 xuống mức giảm 6% trong tháng 8 và giảm 16% trong tháng 9 khi lãi suất thế chấp tăng.
• Bảng cân đối kế toán tiếp tục duy trì tính thanh khoản cao, với 620 triệu USD tiền mặt, không có khoản vay nào thuộc hạn mức tín dụng quay vòng 900 triệu USD và tỷ lệ nợ ròng trên vốn là 2%.
• Ban lãnh đạo dự kiến số lượng khu dân cư vào cuối năm sẽ cao hơn khoảng 5% so với năm trước, nhưng vẫn thận trọng đối với các giao dịch đất mới, việc khởi công, tuyển dụng và chi phí trong bối cảnh nhu cầu chưa chắc chắn.

Dữ liệu tài chính quan trọng

Kết quả kinh doanh và hoạt động

Tỷ lệ hủy hợp đồng trong quý 3 của M/I Homes là 12%. Người mua nhà lần đầu chiếm 50% doanh số, trong khi nhà xây sẵn (inventory homes) chiếm 80%. Dòng sản phẩm Smart Series – dòng sản phẩm giá bình dân nhất của công ty – đóng góp khoảng một nửa doanh số hàng quý, phần còn lại thuộc về người mua chuyển nhà (move-up) và người mua nhà lần thứ hai.

Công ty kết thúc quý với 246 khu dân cư, tăng 6% so với cùng kỳ năm trước. Công ty đã mở 27 khu dân cư và đóng cửa 15 khu trong kỳ. Khu vực phía Bắc ghi nhận hợp đồng và bàn giao tăng 1%, trong khi hợp đồng ở khu vực phía Nam giảm 4% và số lượng hoàn tất giao dịch bàn giao giảm 5%.

Ban lãnh đạo xác định Chicago, Columbus, Minneapolis, Dallas và Charlotte là những khu vực đóng góp hàng đầu vào lợi nhuận bộ phận. Thị trường Florida tiếp tục có sự phân hóa: Orlando duy trì tương đối tốt, hợp đồng tại Sarasota tăng và Tampa giảm. Ban lãnh đạo cho biết hoạt động mới hơn tại Fort Myers và Naples đang vượt kỳ vọng.

M/I Homes sở hữu và kiểm soát khoảng 49.000 lô đất, tương đương nguồn cung trong khoảng 5 năm. Khoảng 23.400 lô thuộc sở hữu, tương đương khoảng 2,5 năm nguồn cung, trong khi khoảng 25.600 lô được kiểm soát thông qua các hợp đồng quyền chọn.

Hàng tồn kho cuối quý bao gồm 3.242 căn nhà, trong đó 721 căn đã hoàn thành. Ban lãnh đạo cho biết số lượng nhà khởi công đã được giảm nhẹ để ứng phó với nhu cầu, với lượng nhà xây sẵn hoàn thiện (speculative inventory) thấp hơn mức cùng kỳ năm trước mặc dù số lượng khu dân cư cao hơn.

Hoạt động thế chấp đạt tỷ lệ gắn kết khách hàng (capture rate) 96%, tăng từ 93% và được ban lãnh đạo mô tả là mức cao nhất từ trước đến nay của công ty. Điểm tín dụng trung bình của người vay là 748, khoản trả trước trung bình vượt quá 16% và tỷ lệ khoản vay trên giá trị tài sản (LTV) thế chấp thứ nhất trung bình là 84%.

Doanh thu từ mảng thế chấp và dịch vụ quyền sở hữu giảm 5% xuống 32,7 triệu USD. Công ty đã phát hành 1.835 khoản vay, giảm 1%, trong khi giá trị khoản vay thế chấp trung bình giảm xuống 403.000 USD từ mức 406.000 USD.

Triển vọng từ Ban lãnh đạo

Ban lãnh đạo ước tính số lượng khu dân cư của M/I Homes vào cuối năm 2026 sẽ cao hơn khoảng 5% so với một năm trước đó.

Công ty không dự kiến có sự thay đổi lớn nào đối với chiến lược tổng thể. Công ty có kế hoạch tiếp tục chọn lọc hơn đối với các giao dịch đất mới, kiểm soát chi phí cũng như tuyển dụng, và điều chỉnh cơ cấu sản phẩm tại một số thị trường được chọn. Sự chuyển dịch sang nhiều nhà ở nâng cấp hơn đã và đang diễn ra tại khoảng 2 đến 4 thị trường, nơi người mua nhà lần đầu từng chiếm tỷ trọng đặc biệt cao.

Ban lãnh đạo cho biết lãi suất thế chấp đã giảm nhẹ sau khi kết thúc quý, nhưng cảnh báo rằng các điều kiện thị trường biến động và khó khăn có thể tiếp tục kéo dài.

Rủi ro và các vấn đề cần theo dõi

Khả năng chi trả khoản vay thế chấp vẫn là áp lực trọng tâm. Trong quý, lãi suất ngang giá (par rate) trung bình cho khoản thế chấp cố định 30 năm đã tăng gần 100 điểm cơ bản, từ khoảng 6,75% vào ngày 1 tháng 7 lên gần 7,75% vào ngày 30 tháng 9. Chi phí bù lãi suất tăng cao hơn đã trực tiếp gây áp lực lên biên lợi nhuận gộp.

Ban lãnh đạo cũng dẫn chứng giá nhiên liệu tăng cao, lo ngại về lạm phát và xung đột tiếp diễn tại Iran là các yếu tố ảnh hưởng đến niềm tin của người tiêu dùng và sự bất ổn kinh tế.

Nhu cầu đã suy yếu đáng kể trong quý, với tăng trưởng hợp đồng chuyển từ mức dương trong tháng 7 sang mức giảm hai chữ số trong tháng 9. Florida và Texas nhìn chung gặp nhiều khó khăn hơn so với vùng Trung Tây và Carolinas, trong đó áp lực đặc biệt lớn ở Tampa và Sarasota.

Mức độ ưu đãi gia tăng khi quý trôi qua. Bù lãi suất thế chấp vẫn là hình thức ưu đãi chính, trong khi một số khu dân cư cũng áp dụng hỗ trợ chi phí hoàn tất thủ tục và giảm giá. Nhiều khách hàng hơn đã cân nhắc các sản phẩm thế chấp lãi suất thả nổi.

Điểm nổi bật trong phần Q&A với chuyên gia phân tích

• Chiến lược cho năm 2027: Ban lãnh đạo không có kế hoạch thay đổi căn bản mô hình kinh doanh hay bán đất trên diện rộng. Công ty dự định bảo vệ tính thanh khoản, xem xét kỹ lưỡng các giao dịch mới và điều chỉnh cơ cấu sản phẩm một cách có chọn lọc.
• Hàng tồn kho xây sẵn: Số lượng khởi công đã được giảm nhẹ. Tổng lượng nhà xây sẵn duy trì ở mức nhỉnh hơn 3.000 căn, trong khi lượng nhà xây sẵn hoàn thiện vào khoảng 700 căn, nhìn chung đi ngang hoặc thấp hơn dù số lượng khu dân cư tăng.
• Chính sách giá tại Florida: Ban lãnh đạo cho biết các quyết định về giá và ưu đãi đang được đưa ra theo từng khu dân cư thay vì điều chỉnh trên diện rộng theo khu vực. Orlando cùng hoạt động kinh doanh mới hơn tại Fort Myers và Naples đạt kết quả tương đối tốt, trong khi Tampa vẫn khó khăn hơn.
• Nguồn cung lao động: Việc thực thi luật nhập cư đã gây ra những gián đoạn không liên tục tại một số thị trường nhất định, nhưng ban lãnh đạo không coi lao động là rào cản lớn về tổng thể. Công ty cho biết có thể xây thêm từ 1.000 đến 1.500 căn nhà mỗi năm nếu nhu cầu ủng hộ sản lượng đó.
• Chi phí SG&A: Mức tăng 5% về chi phí phản ánh phần lớn mức tăng tương tự về số lượng khu dân cư, bao gồm bổ sung nhân sự bán hàng và xây dựng, cùng với chi phí quảng cáo và khuyến mãi cao hơn một chút.
• Phân bổ vốn: M/I Homes đã chi 50 triệu USD để mua lại cổ phiếu trong quý 3 và còn 200 triệu USD theo hạn mức ủy quyền. Kể từ đầu năm 2022, công ty đã mua lại 21% số cổ phiếu đang lưu hành.

Toàn văn biên bản cuộc họp báo cáo kết quả kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good morning, and welcome to the M/I Homes, Inc. Third Quarter Earnings Conference Call. My name is Lacey, and I will be your conference operator today. [Operator Instructions] I would now like to turn the call over to Mr. Phil Creek. Please go ahead.

Phillip Creek

Thank you for joining us today. With me is Bob Schottenstein, our CEO and President; and Derek Klutch, President of our mortgage company. First, to address regulation fair disclosure, we encourage you to ask any questions regarding issues that you consider material during this call because we are prohibited from discussing significant nonpublic items with you directly. .

And as to forward-looking statements, I want to remind everyone that the cautionary language about forward-looking statements contained in today's press release also outlines to any comments made during this call. Also be advised that the company undertakes no obligation to update any forward-looking statements made during this call. With that, I'll turn the call over to Bob.

Robert Schottenstein

Thanks, Phil. Good morning, and thank you for joining us today. Our third quarter results reflect the increasingly difficult market conditions impacting the overall economy, consumer behavior and obviously, the homebuilding industry. In the face of these conditions, we produced solid results, generating $87 million of pretax income equating to an 8% plus return. .

Conditions changed notably during the quarter. Perhaps the best evidence of explaining the intra-quarter volatility is the movement in the benchmark 10-year U.S. Treasury bond. July 1, a -- the 10-year treasury was at 4.5%. By August 1, had risen to 4.75% and then began to rise at a faster pace, particularly during September, and by September 30, it had reached 5.3%.

In similar fashion, the average par contract interest rate for a 30-year fixed rate mortgage increased by nearly 100 basis points during the quarter, going from roughly 6.75% a July 1 to close to 7.75% at September 30. And combination of these rising rates, along with elevated fuel prices, concerns with inflation and the continued conflict in Iran have clearly impacted consumer confidence and demand and have contributed to growing economic uncertainty.

As of today, mortgage rates have actually come down slightly, which is very good news but the current choppy and challenging conditions may continue for some time. Regardless, this is not the first time we've managed through challenging conditions. We've been in business for 50 years. And during times like this, execution matters more than ever and a strong balance sheet is absolutely essential.

I'm proud to share that on both of these counts, M/I Homes is very well positioned to navigate the current market conditions. During the quarter, our teams executed at a very high level. And as I will explain in more detail in a few moments. Our balance sheet is rock solid as strong as at any time in our 50-year history.

For the quarter, we sold 1,861 homes 2% less than a year ago. And for the first 9 months of 2026, we have sold 6,598 homes, which is 5% more than a year ago. We continue to use mortgage rate buydowns as our primary incentive to drive sales. With rates rising during the quarter, the cost of such buydowns has increased, thereby impacting our margins.

We have carefully managed the nature and extensive rate buy downs as we deal with rising rates. And I might add, while rate buydowns are clearly important at this time, well-located communities, quality product and thoughtful design are just as, if not more important.

And I talk about how much execution matters during times like this, the quality of our product the strength of our communities and the skills of our sales associates all make a meaningful difference in our results. In other words, nearly every builder is buying down rates but the builder results from one builder to another clearly differ, and the difference is often all about execution.

During the quarter, we closed 2,241 homes a 2% decrease compared to a year ago. Year-to-date, we have closed 6,361 homes, which is 4% less than a year ago. Our third quarter total revenue decreased by 5% to [ $1.08 billion ] , and pretax income decreased 38% to what I mentioned earlier, $87 million. Our gross margin, excluding inventory charges, was 21.3%, 320 basis points lower than a year ago, down primarily due to the higher cost of rate buy downs and higher lot cost versus a year ago.

Our mortgage company's capture rate for the quarter was 96%. One of the highest capture rates we've ever seen and certainly one of the highest capture rates in the history of the home building industry. We continue to see quality buyers in terms of creditworthiness with average credit scores of 748 and average down payments over 16%.

We -- our Smart Series line of homes, which as most of you know, our most affordable line of homes, and generally appeals to the first-time homebuyer continues to be an important contributor to our sales performance. Of note, -- during the quarter, our Smart Series sales comprised about half of our sales. The other half went to second time or move-up buyers.

We ended the quarter with 246 communities and estimate that at the end of this year, our community count will be about 5% higher than last year. With respect to some comments about our markets, our division income contributions in the quarter were led by Chicago, Columbus, Minneapolis, Dallas and Charlotte.

New contracts during the third quarter in our Northern region increased by 1%. New contracts in our Southern region decreased by 4%. Our deliveries in the Northern region increased by 1% compared to last year and represented 42% of our company-wide total.

In our Southern region, our closings decreased by 5% over last year and of course, represented the other 58% of deliveries. We have an excellent land position. I repeat, we have an excellent land position. Our owned and controlled lot position in the Southern region decreased by 12% compared to last year and increased by 13% versus last year in the northern region.

41% of our total owned and controlled lots are in the north, the other 59% in the Southern region. Company-wide, we own on our books approximately 23,400 lots which is roughly a 2.5-year supply. In addition, we control approximately 25,600 lots via option contracts resulting in a total of roughly 49,000 owned and controlled lots equating to about a 5-year supply.

In my earlier remarks, I spoke about how critically important the strong balance sheet is in times like this. And as I said, our balance sheet is rock solid and continues to be in excellent condition. We ended the third quarter with an all-time record $3.3 billion of equity equating to a book value per share of $130.

We had 0 borrowings under our $900 million unsecured revolving credit facility, and we ended the quarter with over $600 million in cash. This has resulted in a debt-to-capital ratio of 18% and a net debt-to-capital ratio of 2%, one of the lowest debt levels in the homebuilding industry.

Moreover, -- and looking at our balance sheet, it's important to recognize that we are one of the few builders that does virtually 0 land banking. There's no confusion about what's on our books and what isn't. And our balance sheet has essentially 0 goodwill on it. We're very proud of our financial condition.

In closing, though these are more challenging times, we remain quite confident in the long-term fundamentals of the homebuilding industry. With our strong land position, well-located geographic footprint, well-located communities, diverse product offering and strong balance sheet, M/I Homes, is well positioned to manage through this current cycle. And with that, I'll turn it over to Phil.

Phillip Creek

Thanks, Bob. Our new contracts were down 2% when compared to last year. They were up 15% in July, down 6% in August and down 16% in September and our cancellation rate for the quarter was 12%. 50% of our third quarter sales were to first-time buyers and 80% were inventory homes.

Our community count was 246 at the end of the third quarter up 6% versus a year ago. The breakdown by region is 103 in the northern region and 143 in the Southern region. During the quarter, we opened 27 new communities while closing 15, we currently estimate that our 2026 year-end community count will be about 5% higher than last year.

We delivered 2,241 homes in the third quarter and about 35% of our third quarter closings came from inventory homes that were both sold and delivered within the quarter, and this also compares to 35% in last year's third quarter. As of 9/30, we had 5,200 homes in the field versus 5,000 homes in the field a year ago and our construction cost and cycle time were flat in the third quarter compared to the second quarter.

Revenue decreased 5% in the quarter. This decline was due to fewer homes delivered and our average sales price declined also. Our gross margin was 20.9% for the quarter including $5 million of inventory charges. Exiting these charges, our gross margin was 21.3%. Our third quarter SG&A expenses were 13.1% of revenue compared to 11.9% a year ago and our third quarter expenses increased 5% versus a year ago.

Increased costs were primarily due to our increased community count. Interest income, net of interest expense for the quarter was $3.6 million our interest incurred was $9.2 million. Our pretax income was 8% for the quarter, and our return on equity was 9%.

During the quarter, we generated $103 million of EBITDA compared to $157 million in last year's third quarter. And our effective tax rate was 23% in the third quarter compared to 24% in last year's third quarter. Our earnings per diluted share for the quarter decreased to $2.56 per diluted share from $3.92 last year. and our book value is now a record $130 per share. With that, I'll turn it over to Derek Klutch to address our mortgage company results.

Derek Klutch

Thanks, Bill. Our mortgage and title operations achieved pretax income of $13.4 million compared to $16.6 million in 2025, 3rd quarter, down 19%. And Revenue decreased 5% from last year to $32.7 million due to lower margins on loans sold, a lower average loan amount and a slight decrease in the number of loans originated. .

The average loan to value on our first mortgages for the third quarter was 84%, consistent with 2025's third quarter. 63% of the loans closed in the quarter were conventional, and 37% FHA or VA compared to 55% and 45%, respectively, for 2025's third quarter.

Our average mortgage amount decreased to $403,000 in 2026, 3rd quarter compared to $406,000 last year. Loans originated decreased to 1,835 loans, which was down 1% from last year, while the volume of loans sold decreased by 5%. The Finally, as Bob mentioned, our mortgage operation captured 96% of our business in the third quarter. This was up from 93% last year. Now I'll turn the call back over to Phil.

Phillip Creek

Thanks, Derek. As far as the balance sheet, our financial position continues to be very strong. We ended the third quarter with no borrowings under our $900 million credit facility and had a cash balance of $620 million. We continue to have one of the lowest debt levels of the public homebuilders and are well positioned with our maturities.

For bank line matures in late 2030 and our public debt matures in 2028 and 2030. Our unsold land investment at 9/30/26 is $1.9 billion compared to $1.8 billion a year ago. And at 9/30, we had $853 million of raw land and land under development and $1.1 billion of finished unsold lots.

During the third quarter, we spent $135 million on land purchases and $155 million on land development for a total of $290 million. At 9/30, we own 23,000 lots and controlled 49,000 lots. At the end of the quarter, we had 721 completed inventory homes and 3,242 total inventory homes.

And of the total inventory, 1,338 are in the Northern region and 1,904 in the Southern region. Last year at 9/30, we had 776 completed inventory homes and 3,001 total inventory homes. We spent $50 million in the third quarter, repurchasing our stock and have $200 million remaining under our current board authorization. Since the start of 2022, we have repurchased 21% of our outstanding shares. This completes our presentation. We'll now open the call for any questions or comments.

Operator

[Operator Instructions] Your first question comes from the line of Alan Ratner with Zelman & Associates.

Phần hỏi đáp

Alan Ratner

You guys have been probably 1 of the most nimble builders over the last decade or so in terms of making some modest adjustments to your business model and strategy based on market conditions. I'm thinking, obviously, the growth in the Smart Series and kind of adjusting the spec mix based on market conditions. We've been in a challenging market for a while now, but it sounds like things have kind of taken another leg down this quarter with not much certainty or outlook for improvement in the near term.

So I'm curious whether there's more recent leg down and the move higher in rates is causing you to maybe think through the strategy heading into '27 and just thinking through your model, whether it's the mix of your business at spec versus BTO or price point or just land strategy. I'm curious if you're kind of making any adjustments or beginning to think about making adjustments based on the current market reality?

Robert Schottenstein

That's a great question. The first thing I want to say is you can't know what you don't know, right? I mean, sorry for saying something so obvious. But at the beginning of this year, I don't know if too many people that predicted that we would see not only the kind of rate movement that we've seen, which has trended considerably up rather than flat or down. But I don't think anyone believed or even had in their crystal ball that there would be a war beginning at the end of the first quarter, and it has continued now for 6 months.

And all of the related economic impacts that it has had, which I think have impacted in a negative way consumer confidence. That's been well documented. You've written about it as articulately as anyone. Having said all that, in good time in and bad, I think that and I didn't always know this, but it couldn't be clearer to me today as it maybe it wasn't as clear 20 years ago but in good time and bad, there's no financial piece of paper that's more important than your balance sheet.

And when things are more challenging, the importance of the balance sheet becomes more and more and more important, not because you think that we're about to enter a tsunami or some 100-year flood or something, but because you got to be prepared to deal with unexpected things like we've sort of seen happen this year. I don't think the sky is falling. I don't believe that nobody knows for sure I still think that there's so many positive underlying fundamentals that support the long-term health and vitality of the homebuilding industry we're not going to start selling a bunch of land. We've got a great land position.

Are we going to be more careful about new deals? Yes, we are. Will we control enough land, both on and off of our books to be able to manage whatever come what may come. We're not going to make any material changes. Maybe in a few markets, we might adjust our product mix a little bit company-wide. I don't see us making a lot of material changes to that.

There's a bit of a lead time associated with that anyway. I think we have a great strategy. And I think that we've been doing the right things it's easy to say execution matters. We're not perfect. We don't do everything A plus. But we do a lot of things really, really well. The 96% capture rate in our mortgage operation is yet another, it's the highest in the industry. We didn't -- that's not dumb luck. A year ago, it was 93%, and that was the highest in the industry. Pay a lot of attention to sales training more than ever. There's more sales training going on in our company today than at any time in our 50-year history.

And that didn't just start when rates went up 100 basis points. That's been going on since the beginning of the year because you've got to keep getting better. And I love the way we think about land. We were one of the few builders that was never romanced into doing land banking and a lot of off-balance sheet stuff. Maybe we should have, I don't know, but I like that we control it.

And I like that we're not painting the premium for it. And I'm liking that our best deals aren't potentially cross collateralized with a land banker who may be looking to call a bad deal. My point is we have our hands firmly on the rudder. If we don't go in the right direction, it's our fault. But we were really intensely focused on what we can control and our customer service scores are the highest in company history, our home readiness scores, which has to do with the completeness of the home at the time of closing are the highest in company history.

This is all third-party tabulated, our Google review scores across all of our divisions are the highest in company history. So when you talk about execution and focusing on controllables there's a lot to really feel good about. But this is -- these are tough conditions.

July conditions were a whole lot better than September and August was a whole lot better than September, too. And -- but I don't see any reason for some radical change. Yes, we're going to watch new hiring. We're going to control expenses. We're going to do all the things that, I guess, most of our peers are going to be doing right now as well as we're dealing with all these uncertainties. But I don't think the sky is falling, and I couldn't be -- homebuilding is a cyclical business, listen to your first rodeo either.

You've seen the cycles, maybe we're due for a bit of one because things have been pretty good for quite some time. but I wouldn't want to be any other builder. I wouldn't want to be anywhere else. I love our geographic footprint. There's times when Florida is a lot better than the Midwest and there's times when Texas is the strongest these things come and go and go up and down.

But in balance, we've got a very dominant position in the Midwest, a tremendous position in the Carolinas. Florida is a little bit of a struggle now, particularly the West Coast, but remain extremely bullish long term on Florida, and Dallas and Houston remain 2 of our best operations out of our [ 17 ] -- so just trying to tell it like I see it.

Phillip Creek

And one other thing I would add, sure echo what Bob says about how much execution matters. Obviously, having a really, really strong clean balance sheet, having a lot of liquidity is really important. So we continue to always focus on that. We have kind of reduced starts a little bit due to market conditions.

You'll see that our spec levels a little over 3,000 in total. And our finished spec levels being in that 700 range. It's pretty much flat where it was a year ago, even though we do have 5% more stores. So we're not trying to force anything because demand is an issue -- but again, we'll just continue trying to block and tackle better than others.

Operator

Your next question comes from the line of Buck Horne with Raymond James. .

Buck Horne

I appreciate all that color. Very helpful. Yes, I wanted to follow up a little bit on wanted to follow up kind of on what you're seeing you mentioned the West Coast of Florida. It looks like at least in early October, you guys have made some more significant pricing adjustments on some QMI homes, particularly in Tampa and Sarasota, maybe follow up on kind of how Florida is trending in general for you? And how you think those pricing adjustments will take? And are you making any more significant either incentive adjustments or pricing adjustments in other regions in October?

Phillip Creek

Buck, as Bob said, Florida and Texas have been a little more challenging in general than the Midwest and the Carolinas have been we've had a very, very strong operation in Florida, especially for years. Orlando has actually held up pretty good for us. Tampa, Sarasota had been a little more challenging we obviously make adjustments on a community basis periodically as we need to, and we are excited about our -- still a little bit of a startup operation in Fort Myers and Naples.

But I wouldn't say we're doing anything significantly again as kind of a subdivision by subdivision situation. If you just look at our new contracts in the third quarter, actually, compared to the prior year, Sarasota was up. Tampa was down a little bit. So it's kind of a little bit of a mixed bag in Florida. But overall, it still continues to be challenged. But we still feel really good about our leadership teams and really good about our opportunity there.

Robert Schottenstein

The only thing I might add, Fort Myers, Naples, exceeding our expectations. We're off to a very good start there. And obviously, it's a relatively new division for us, but very optimistic about that. And I just want to underscore, we probably have one of the best teams in our company in Tampa, -- so whatever the market may come, I've got tremendous confidence that we'll figure it out.

Buck Horne

I appreciate that. Yes, and go raise, right? So 1 quick on labor availability. It seems like there's been a lot more discussions about whether it's immigration enforcement activity or just other complications with getting fruits out to job sites on time? Are you seeing any effects of labor availability or immigration enforcement so far here in the -- through the third quarter?

Phillip Creek

In certain markets, and it seems to kind of come and go. We have issues with ICE and those type of issues overall, we feel good about where we are. We do have a few more houses in the field today than we did a year ago do desire to grow. We talked about community count being up 5% at the end of this year from a land position we could be doing.

And I think also from a labor standpoint, we could be doing probably 1,000 or 1,500 more homes a year if the demand was there. That's the biggest issue we have right now. So I would not say that labor is a huge issue. From a cost standpoint, especially with all the gas increases in diesel and land development, those type of things. We feel pretty good about our construction cost and land development costs have continued to be pretty flat. So we continue to focus on all those blocking and tackling things, Buck, which we were making more progress, but we feel pretty good about what we're doing.

Buck Horne

Appreciate the color. It sounds like you're doing a great job under the circumstances. All right. Good luck, guys.

Operator

Your next question comes from the line of Jay McCanless with Citizens Bank. .

Jay McCanless

So on the SG&A, could you talk about how much -- were there any onetime items in there? Or is that just where the level is now with the higher community count?

Phillip Creek

Jay, as we said, our SG&A expenses were up about 5%, which is similar to community count. For every community, in general, you have a couple more salespeople you have construction people, et cetera. So in general, that community count increase does increase that. Are we spending a little more money on the advertising, promoting side, yes, we are.

But the biggest issue is just the impact of increased community count, which we've talked about, we should like to increase that community count 5% to 10% a year is kind of our goal. We've been able to do that the last couple of years and this year.

Jay McCanless

And then the next question I had, you guys gave a lot of useful commentary about shifting into more move-up product last quarter. I guess, could you talk about what -- the numbers were -- I think you gave the already, but maybe talk about what the numbers for move-up were this quarter? And kind of following on Alan's question, are you guys looking to pivot more to move up into '27 than what you did in '26?

Phillip Creek

You're talking about the move-up buyer categories commodities .

Jay McCanless

Yes. I mean... Sure. Last quarter's conference call, you guys talked about shifting into more move-up communities focusing more on the move-up buyer -- could you talk about what you're doing this quarter, but then also kind of following on Alan's question, are you looking for ways to maybe change or communities in '27 .

Robert Schottenstein

Not really what's in place in select markets -- and I'm not going to mention which ones because there's no reason to. But in select markets, there is a greater emphasis on more move up than now. That began probably 3 to 6 months ago, and that will continue. So nothing has really changed in the last couple of quarters. In many of our markets, we have a very good mix right now, and I don't see it changing much.

But clearly, in 2 or 3 or maybe 4 of our markets, we're shifting the mix a little bit more towards the move up. That's already underway. It's playing out as we speak. And that's it's not a change during the third quarter. That was something that we started actually earlier this year. And these were markets where over 75% of our business was first time -- we never really felt great about that even before the move up the game more in vogue. We always felt sometimes things just sort of end up a certain way, I never want too many eggs in 1 basket because we don't have to do that. We're not going to.

Jay McCanless

And then the last question I had, just could you talk about what the incentive levels were this quarter and how they're trending to start the fourth quarter levels.

Phillip Creek

Well, obviously, our margins have been going down. And as Bob said, we primarily use incentives and mortgage rate buy downs every community is a little different as far as -- especially with first-time buyers, they tend to meet more help also with closing costs. I think also 1 of the things in the marketplace right now, in general, is I think the first thing all buyers expect is a reduced competitive interest rate, and you are seeing in certain markets a little more price reduction -- so it's kind of hard to figure out all the different breakdown of incentives.

Incentives definitely did increase as we went through the quarter. But again, it's just a community-by-community standpoint. We're having customers go a little bit more toward ARM products now than they were before, but that's something that's just always changing that we just have to deal with, and we track that every day and work on it every day and every community.

Operator

There are no further questions. I would now like to turn it back to Phil Creek for closing remarks. .

Phillip Creek

Thank you very much for joining us. Look forward to talking to you next quarter.

Operator

This concludes today's conference call. You may now disconnect.