M/I Homes: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 21, 2026, M/I Homes (NYSE:MHO) reported pre-tax income of $87 million. Homebuilders face margin pressures when rising interest rates elevate customer financing subsidies. Maintaining a strong balance sheet while managing lot inventory determines long-term resilience through industry cycles.

Three things management said stand out.

1. Mortgage Rate Buydowns Drive Sales but Squeeze Gross Margins

Management prioritized order volume by offering mortgage rate buydowns, where it's paying upfront fees to reduce buyer interest rates. These financing subsidies helped maintain sales volume, but higher subsidy costs reduced gross margin, which is the percentage of revenue remaining after direct construction costs, to 21.3%.

We continue to use mortgage rate buy downs as our primary incentive to drive sales. With rates rising during the quarter, the cost of such buydowns has increased. Thereby impacting our margins.
-- Robert H. Schottenstein, Chief Executive Officer and President

2. Financial Services Subsidiary Captures Nearly All Financing Business

The company's mortgage segment achieved a 96% capture rate, which represents the percentage of home buyers who finance their purchase through its internal mortgage operations. Securing buyer loans internally provides consistent financing revenue, so it doesn't have to rely on third-party lenders to close sales during uncertain market cycles.

“Finally, as Bob mentioned, our mortgage operation captured 96% of our business in the third quarter. This was up from 93% last year,” said Derek J. Klutch, President of M/I Financial.

3. Aggressive Share Repurchases Reduce Capital Base During Market Downturns

Management deployed $50 million toward stock repurchases, using cash reserves rather than debt to shrink the share count. That doesn't drain liquidity because the company holds substantial cash reserves, and it leaves $200 million remaining under its board authorization, which is formal approval from the board of directors to repurchase equity.

We spent $50 million in the third quarter repurchasing our stock and have $200 million remaining under our current board authorization. Since the start of 2022, we have repurchased 21% of our outstanding shares.
-- Phillip G. Creek, Executive Vice President and Chief Financial Officer

Looking Ahead

Macroeconomic volatility and elevated mortgage rates weigh on consumer confidence, yet housing market fundamentals haven't lost their durability across core geographic markets. M/I Homes relies on its unsecured credit facility, which functions as a flexible bank line, alongside a controlled lot position of optioned land so it doesn't overcommit capital while management monitors pricing discipline and construction cycle times.

I do not think the sky is falling. I do not believe that. Nobody knows for sure. I still think that there is so many positive underlying fundamentals that support the long term health and vitality of the homebuilding industry.
-- Robert H. Schottenstein, Chief Executive Officer and President

A conservative balance sheet featuring low net debt and cash reserves positions the builder to absorb short-term market turbulence, so it's ready to execute its long-term expansion strategy.

With our strong land position, well located geographic footprint, well located communities, diverse product offering, and strong balance sheet MI Homes is well positioned to manage through this current cycle.
-- Robert H. Schottenstein, Chief Executive Officer and President

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