Cancellations top 20% at NVR and D.R. Horton, giving buyers room to negotiate

More than one in five buyers who signed a contract with NVR last quarter canceled before closing, and D.R. Horton’s rate was higher still ^[1][2]. NVR’s profit fell 27% ^[1].

PulteGroup, which reported the same day as NVR, closed 6,876 homes, 9% fewer than a year ago, and earned $2.53 a share against $2.96 ^[3]. CEO Ryan Marshall said higher rates had “stretched affordability even further” ^[3].

All three builders are earning less on each home they sell

NVR blamed its lower margin on higher lot costs and “pricing pressure due to continued affordability challenges” ^[1]. D.R. Horton said it expects incentives to stay high in fiscal 2027 ^[2].

D.R. Horton’s average closing price for the fiscal year came to about $363,600, by our math from $30.6 billion of home sales revenue on 84,202 closings ^[2].

PulteGroup’s margin already absorbs $26 million of land impairments, and its orders came in lower even though it sold from 7% more communities on average ^[3].

High mortgage rates are a big reason buyers cancel their contracts

The 30-year fixed rate averaged 7.24% in Freddie Mac’s latest weekly survey ^[4]. On a $365,000 home with 10% down, we calculate the monthly payment at about $2,239 in principal and interest, before taxes and insurance.

A buyer who signed months ago can fail to qualify at that payment by the time the house is finished.

How to use this

For buyers of new homes

1. Ask the sales office for its list of homes that are finished and still unsold. D.R. Horton had 8,800 of them at the end of September, and 600 had been finished for more than six months ^[2]. The builder pays taxes, insurance and interest on each of those homes every month they sit empty.
2. Ask for a rate buydown before you ask for a lower price. On the same $365,000 home, we calculate that cutting the rate from 7.24% to 6.24% lowers the payment by about $219 a month, to $2,020. Ask the builder to put the dollar cost of the buydown in writing so you can compare it with an equal price cut.
3. Get every incentive written into the purchase contract, and ask whether it depends on using the builder’s own lender.

For land and lot sellers

1. Expect an option contract instead of a cash sale. D.R. Horton holds 77% of its 570,600 lots under purchase contracts rather than owning them ^[2].
2. Ask for a deposit that becomes non-refundable when due diligence ends, and for lot purchases on a fixed schedule. NVR took about $24.8 million in impairments on land deposits this quarter ^[1], a sign that builders give up deposits when a deal stops working, and a larger deposit makes that choice more expensive.

In Texas, builders pulled permits for 150,609 homes from January through September, 7.8% fewer than in the same months of 2025 ^[6]. Sellers there can check their metro’s permit trend on The Portal’s Texas page before agreeing to how many lots a builder buys each quarter.

Nationally, permits ran at a seasonally adjusted annual rate of 1,398,000 homes in September, down from 1,444,000 a year earlier ^[7].

For investors and lenders

1. Track the cancellation rate next to the order count every quarter. NVR’s backlog grew 10% to 10,121 homes ^[1], but backlog only becomes revenue when buyers close, and 21% of NVR’s new contracts were canceled last quarter.
2. Compare gross margins across builders before you commit capital. We calculate a gap of 6.5 points between PulteGroup’s 24.8% and NVR’s 18.3%, and both companies reported a lower margin than a year earlier ^[1][3].