Smith Douglas Homes (NYSE:SDHC), one of the fastest-growing private homebuilders in the United States, reported financial results for the fourth quarter and full year ended December 31, 2025.
The company faced significant year-over-year declines in its final quarter, as higher mortgage rates and shifting buyer incentives contributed to a contraction in both volume and profitability.
For the fourth quarter, home closings decreased 7% to 780 units, leading to a 9% decline in home closing revenue, which totaled $260.4 million.
Most notably, the company's home closing gross margin narrowed to 19.9%, a sharp decrease from the 25.5% reported in the same period in 2024.
This compression reflects the increased use of sales incentives and rising land and construction costs that have permeated the entry-level housing market.
The downturn in quarterly volume was also reflected in demand metrics, as net new home orders fell 7% to 532.
These factors weighed heavily on the bottom line, with pre-tax income dropping to $16.9 million from $30 million a year prior.