Century Communities (NYSE:CCS) reported stronger second-quarter 2026 results, with management citing improved order activity, higher deliveries, lower incentives and tighter cost controls despite what executives described as macroeconomic headwinds and weak consumer sentiment.
Executive Chairman Dale Francescon said the homebuilder delivered earnings of $1.26 per diluted share, up 11% from a year earlier and 50% sequentially. The company delivered 2,506 homes in the quarter, ahead of its guidance range of 2,200 to 2,400 homes. Francescon said deliveries benefited from a stronger absorption rate, which rose 6% from the prior quarter, compared with a historical average second-quarter decline of 7% over the previous five years.
Orders Improve as Community Count Reaches Record
Chief Executive Officer Rob Francescon said net orders totaled 2,615 homes in the second quarter, up 3% year over year and 10% sequentially. He said most of the increase came from improved absorption rates, and order activity remained consistent throughout the quarter, with June orders roughly in line with April and May.
The company averaged 321 communities during the quarter and ended the period with 330 communities, up 4% sequentially and a company record. Rob Francescon noted that the net increase in community count occurred in June, meaning second-quarter orders did not receive a meaningful benefit from the higher quarter-end community count.
Traffic in the second quarter was about 9% higher than first-quarter levels, and June traffic was 18% higher than April levels. The cancellation rate declined year over year to 13.2%.
Rob Francescon said order activity so far in July has been in line with typical seasonality, though he said it was too early to determine the effect of recent interest-rate increases on buyers.
Margins Benefit From Lower Incentives and Costs
Century reported second-quarter home sales revenue of $898 million, with an average sales price of $358,000. Chief Financial Officer Scott Dixon said pretax income was $49 million and net income was $36 million.
The company’s GAAP homebuilding gross margin was 18.1%, while adjusted gross margin was 20%. Both increased 30 basis points from the first quarter. Dixon noted that first-quarter margins had benefited by 90 basis points from a reduction to the company’s warranty accrual and rebate collections above prior estimates. Excluding that first-quarter benefit, he said second-quarter gross margin would have increased by 120 basis points sequentially, driven by lower incentives and direct construction costs.
Rob Francescon said incentives on delivered homes averaged 1,200 basis points, down about 50 basis points from the first quarter of 2026 and 100 basis points from the fourth quarter of 2025. He said incentives on closed homes were relatively consistent during the second quarter, and the company expects third-quarter incentives to be consistent with levels seen in the first half of the year, assuming current market conditions.
Direct construction costs on delivered homes declined 5% sequentially. Cycle times averaged 112 calendar days, down from both the prior year and prior quarter and a company record. Finished lot costs were flat sequentially, and the company continues to expect average finished lot costs for 2026 to be only 2% to 3% higher than fourth-quarter 2025 levels.
Mortgage Strategy and Affordability
Rob Francescon said adjustable-rate mortgages accounted for nearly 35% of the mortgages originated by the company by principal volume in the second quarter. That was up from about 30% in the first quarter of 2026 and less than 5% in the first quarter of 2025.
“Receptivity of our buyers to ARMs has been increasing, and this increased adoption of ARMs could help partially address the market’s affordability challenges,” he said.
In response to an analyst question, Rob Francescon said the company believes it can push ARM usage higher, calling the products an affordable option for many buyers based on how long they may stay in their homes.
Capital Allocation and Guidance
Century ended the quarter with just over 60,000 owned and controlled lots. Rob Francescon said owned lots declined 2% sequentially, while total lot count rose 3% as the company continued to manage its land position. The company expects 2026 land acquisition and development spending of $1 billion to $1.2 billion, with flexibility to raise or lower that amount depending on market conditions.
Dixon said Century ended the quarter with $2.6 billion in stockholders’ equity and a book value per share of $90.24, a company record. The company maintained its quarterly dividend of $0.32 per share and repurchased 353,000 shares for $20 million at an average price of $55.54 during the quarter. Through the first half of the year, Century repurchased 970,000 shares for $60 million, representing more than 3% of shares outstanding at the start of the year.
The company raised the midpoint and low end of its full-year 2026 delivery guidance. It now expects:
- Home deliveries of 9,750 to 10,500 homes for 2026.
- Home sales revenue of $3.5 billion to $3.8 billion.
- Third-quarter deliveries of 2,500 to 2,700 homes, with a further sequential increase expected in the fourth quarter.
- Full-year tax rate of 26% to 27%.
Regional Trends and Cost Pressures
During the question-and-answer portion of the call, management said it remains constructive on Texas, where selling communities increased. Dixon said Houston remains a strong market for the company, especially among entry-level and first-time buyers, while San Antonio has been a “bright spot.” He said Austin appears to be improving, while the Dallas operation is still scaling.
Asked about vendor cost pressures, Rob Francescon said the company has received requests tied to higher oil prices, including diesel and asphalt on the land development side, but is pushing back on those increases. He said lumber tailwinds have likely ended, with costs “flat to up” but not yet meaningful on a percentage basis.
On competitive conditions, Rob Francescon said inventory levels appear to be in normal ranges and that the company has not seen “crazy discounting” to the extent it had last year or earlier this year. Dixon added that Century ended June with slightly below three finished spec homes per community, a level management said it views as appropriate for serving buyers.
“We are effectively balancing pace and price and controlling our costs and inventory levels,” Dixon said.
About Century Communities (NYSE:CCS)
Century Communities, Inc is a national homebuilder and land developer headquartered in Greenwood Village, Colorado. The company is engaged in the acquisition, development, construction and sale of single- and multi-family residential homes, offering a range of floor plans and design options to homebuyers. In addition to its core homebuilding activities, Century Communities provides ancillary services such as mortgage financing, title and closing services, and insurance products through its wholly owned subsidiaries, aiming to deliver a comprehensive homebuying experience.
Founded in 2009, Century Communities rapidly expanded through both organic growth and strategic land acquisitions, positioning itself in high-growth markets across the United States.
