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NVR's third-quarter profit declined as shrinking margins and higher costs affected earnings, with net income falling 20% to USD 342.7 million and earnings per share dropping to USD 112.33, slightly above analysts' expectations. The gross profit margin decreased to 21.0% due to higher lot costs, pricing pressures, and contract land deposit impairments. New home orders fell 16%, while cancellations increased to 19%. Homebuilding revenues fell 4.4% to USD 2.56 billion. Rising interest rates and tariffs on construction materials continue to challenge the US homebuilding sector.
US homebuilder NVR saw a decline in third-quarter profit as shrinking margins and higher costs impacted earnings, leading to a 2.3% drop in its shares. Profit for the quarter fell 20% compared with the same period last year, with earnings per share down 14%. Advertisement
High interest rates have affected US homebuilders in recent quarters, prompting them to offer smaller homes and incentives such as mortgage rate buydowns to attract buyers. The situation has been further complicated by tariffs on key construction materials and regulatory challenges, creating cost uncertainties for the industry.
NVR highlighted that higher lot costs, pricing pressures due to affordability challenges, and contract land deposit impairments contributed to the decline in margins. The company's gross profit margin for homebuilding dropped to 21.0% from 23.4% in the previous year.
Net income for the quarter was USD 342.7 million, or USD 112.33 per share, compared with USD 429.3 million, or USD 130.50 per diluted share a year earlier. Analysts had expected earnings of USD 109.36 per share, according to LSEG data.
New home orders for the quarter declined 16%, while the order cancellation rate rose to 19% from 15% in the same period last year. Homebuilding revenues fell 4.4% year-over-year to USD 2.56 billion, slightly above analysts' estimate of USD 2.50 billion.
Based in Reston, Virginia, NVR operates in a market where buyers are cautious due to higher borrowing costs. The results indicate ongoing pressure on builders to balance rising construction costs with sales volumes and maintain profitability amid uncertain demand.
Source Reuters
5th Jun, 2025
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