K. Hovnanian, remaining committed to a pace-over-price philosophy, relied on heightened incentives to clear inventory, pushing homebuilding gross profit margins to 13.4%, 490 basis points lower than a year earlier. The comparison is difficult, mainly because we've offered even greater incentives this year to maintain sales pace, which has driven much of the year-over-year decline in profit.
Beneath those headline numbers lies a more important strategic message for homebuilding leaders navigating 2026's high-rate, high-price, high-uncertainty environment: This is a year to decide not only what to lean into but what to step away from. Less than a decade ago, Taylor Morrison deliberately expanded its geographic footprint and product mix to compete across both discretionary move-up buyers and the entry-level, first-time segment. That diversification helped power years of growth. Now, management is signaling a pivot back toward core strengths.