United Homes Group Q1 2025: Contradictions in Sales Trends, Revenue Growth, and Margins

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Housing Market Performance and Sales:
- United Homes Group delivered 252 homes in Q1 2025 with an average sales price of $345,000, generating $87 million in home sales revenue, a decrease of 13.7% from the previous year.
- The fall in sales was due to a slower sales pace in January and February, impacted by normal seasonality and abnormal snowfall, with some improvement noted in March and April.

Margins and Cost Reduction Initiatives:
- Home sales gross margins improved by 20 basis points year-over-year to 16.2%, but remained depressed due to elevated incentive activity and strategic discounting of move spec inventory.
- The company initiated a product refresh and cost reduction plan, identifying over $3.5 million in direct construction cost savings, which is expected to ramp up in the second half of 2025.

Emphasis on Presold Homes:
- United Homes Group shifted its focus to presold homes over spec inventory, with 95 newly designed homes in backlog carrying an average gross margin of approximately 24%.
- This strategic shift aims to capitalize on buyers willing to pay higher margins for customized homes, reducing capital tied up in inventory and improving delivery visibility.

Land Asset Strategy:
- As of March 31, 2025, United Homes Group owned or controlled approximately 7,500 lots, employing an asset-light strategy for future growth.
- This approach allows for a disciplined underwriting of new land deals and cooperation with land partners on future lot takedown terms.