Taylor Morrison Home (NYSE:TMHC) executives said fourth-quarter results met or exceeded expectations across nearly all key operational metrics despite what CEO Sheryl Palmer described as “challenging market conditions,” highlighting continued pricing competition, elevated industry inventory, and affordability constraints that remain most acute for first-time buyers.
Palmer said the company closed 2025 having delivered nearly 13,000 homes with an adjusted home closings gross margin of 23% and achieved 40 basis points of SG&A leverage on essentially flat home closings revenue. The company also repurchased $381 million of shares in 2025, which management said contributed to a 13% return on equity and 14% growth in book value per share.
Fourth-quarter demand trends and buyer mix
Management said fourth-quarter strength was driven primarily by the Esplanade resort lifestyle communities, which posted 7% year-over-year net order growth. Move-up sales saw a low single-digit decline, while non-Esplanade resort lifestyle and entry-level orders declined in the mid- to high-single digits. On a mix basis, orders remained relatively consistent quarter over quarter at 31% entry-level, 49% move-up, and 20% resort lifestyle.
Regionally, Palmer said sales were strongest in the company’s east and west areas, with most Florida markets, California, and Phoenix increasing year over year. The central region lagged due to softness in Texas, particularly Austin.
Financial results: profits, margins, inventory, and overhead
CFO Curt VanHyfte reported fourth-quarter net income of $174 million, or $1.76 per diluted share, and adjusted net income of $188 million, or $1.91 per diluted share. Adjustments excluded pre-acquisition abandonment charges and a loss on extinguishment of debt related primarily to the redemption of 2027 senior notes. For the full year, the company reported net income of $783 million, or $7.77 per diluted share, and adjusted net income of $830 million, or $8.24 per diluted share, with additional adjustments including real estate impairments, pre-acquisition abandonments, and earlier-year warranty charges.
Fourth-quarter net orders were 2,499 homes, down 5% year over year, which management attributed to lower monthly absorption of 2.4 homes per community compared with 2.6 a year ago, partially offset by a 1% increase in ending community count to 341 outlets. Cancellation rates improved to 12.5% of gross orders, down from 15.4% in the prior quarter and 13.1% a year ago.
Closings in the fourth quarter totaled 3,285 homes at an average price of $596,000, generating about $2 billion of home closings revenue. For 2025, the company delivered 12,997 homes at an average price of $597,000 for approximately $7.8 billion of home closings revenue.
Home closings gross margin in the fourth quarter was 21.8%, slightly above prior guidance of about 21.5%, and down from 24.8% a year earlier. VanHyfte cited higher incentive levels and a greater mix of lower-margin spec home closings. Spec homes accounted for 72% of sales and 66% of closings in the quarter, up from 61% and 54%, respectively, in the fourth quarter of 2024.
For the full year, home closings gross margin was 22.5% on a reported basis and 23% adjusted for inventory impairments and warranty charges, compared with 24.4% reported and 24.5% adjusted in 2024. SG&A was 9.9% of home closings revenue in the quarter and 9.5% for the year, a 40 basis point improvement, driven primarily by lower payroll-related costs and efficiencies from consolidation and digital tools, management said.
On inventory, the company ended the quarter with 5,682 homes under construction, including 2,956 specs, of which 1,232 were finished. VanHyfte said total spec count was down 11% sequentially as the company continued “right-sizing” inventory by community. Palmer added the company reduced spec inventory by 24% since the second quarter of 2025, but still ended 2025 with nearly 3,000 unsold homes, including just over 1,200 finished homes.
2026 outlook: lower backlog, more openings, and margin headwinds early
Looking to 2026, Palmer said the company expects “another solid year,” but one geared toward positioning for “a reacceleration of growth in 2027 and beyond.” A key variable is a lower-than-normal backlog: due to slower to-be-built sales in 2025, the company entered 2026 with just over 2,800 homes in backlog, making deliveries and margins more dependent than usual on spring selling season sales.
Management said it plans to accelerate community openings in 2026, with “well over 100” new outlets, including more than 20 Esplanade outlets, supported by “deep interest lists.” VanHyfte guided to high single-digit outlet growth to 365–370 outlets by year-end, with about 360 communities expected by the end of the first quarter.
For deliveries, the company expects around 11,000 closings in 2026, including about 2,200 in the first quarter. Average closing price is expected to be about $580,000 in the first quarter and $580,000 to $590,000 for the full year.
Margins are expected to be pressured early as the company works through spec inventory. VanHyfte said first-quarter home closings gross margin, excluding any inventory-related charges, is expected to be approximately 20%. He said the company expects gross margins to improve gradually throughout the year, driven mainly by a higher share of to-be-built deliveries and a modest reduction in incentives, though he emphasized incentives will depend on spring demand and interest rates. Construction costs are expected to be relatively stable, while lot costs are expected to rise in the mid-single-digit range.
Land strategy, Yardly build-to-rent, and capital returns
Chief Corporate Operations Officer Erik Heuser said the company ended the year with 78,835 owned or controlled homebuilding lots, with 54% controlled off balance sheet, down from 86,153 lots and a 57% controlled ratio at the end of 2024. Heuser said the lower controlled ratio reflects normal takedowns on certain seller-financed assets and recent walkaways from controlled lot deals as the company reevaluated its pipeline. Over the long term, Taylor Morrison targets a controlled ratio of at least 65%.
Homebuilding land investment was approximately $2.2 billion in 2025, down from $2.4 billion in 2024 and below the prior target of roughly $2.3 billion, reflecting cautious land approvals. Heuser said 2026 land investment is expected to be around $2 billion, with renewed emphasis on move-up and resort lifestyle opportunities.
Management also discussed its build-to-rent platform, Yardly. Heuser said the company sold one Yardly community in the fourth quarter for approximately $55 million. At year-end, Taylor Morrison had 46 Yardly projects owned and controlled representing about 10,400 home sites across nine markets in Arizona, Texas, Florida, and the Carolinas. Heuser said about 17 projects will be in profitable leasing operations in 2026, with seven expected to reach targeted stabilization levels over the next 12 months. He also said Yardly communities transact like multifamily assets and, based on the company’s understanding, management does not anticipate an impact from a recent executive order aimed at the single-family rental market.
On capital allocation, VanHyfte said liquidity ended the quarter at approximately $1.8 billion, including $850 million of unrestricted cash and $928 million available on the revolving credit facility. Net homebuilding debt-to-capitalization was 17.8%, down from 20% a year earlier. The company repurchased 1.2 million shares for $71 million in the quarter and 6.5 million shares for $381 million in 2025. Management said the board increased and extended the share repurchase authorization to $1 billion through Dec. 31, 2027, and the company expects to repurchase approximately $400 million of stock in 2026.
About Taylor Morrison Home (NYSE:TMHC)
Taylor Morrison Home Corporation (NYSE:TMHC) is a leading national homebuilder and developer specializing in the design, construction and sale of single-family detached and attached homes. The company’s portfolio spans entry-level, first-time, move-up and active-adult segments, offering buyers a diverse array of architectural styles, floor plans and personalized design options. Through its vertically integrated model, Taylor Morrison manages land acquisition, community development, construction and sales to deliver quality homes and customer-focused experiences across its markets.
The company’s heritage traces back to Morrison Homes, founded in 1977, and Taylor Woodrow, established in 1921 in the United Kingdom.
