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During the Pandemic Housing Boom, many publicly traded homebuilders achieved record profit margins as home prices soared and homebuyer demand ran red hot. Once the national housing demand boom fizzled out in the summer of 2022, many large homebuilders compressed their margins in order to do affordability adjustments where and when needed to maintain their sales pace.
That includes giant homebuilder PulteGroup, which reported on Thursday that it compressed its Q1 2026 gross margin to 24.4%, compared with 27.5% in Q1 2025 and 24.7% in Q4 2025. While that’s still one of the stronger gross margins in the sector, it’s well below PulteGroup’s Q1 cycle high of a 29.6% gross margin in Q1 2023.
The giant homebuilder—ranked No. 229 on the Fortune 500—used that compressed margin in order to deploy bigger sales incentives.
In “normal” times, PulteGroup spends around 3.0% to 3.5% of the sales price on incentives.
Since the Pandemic Housing Boom fizzled out, the builder has leaned into larger incentives, which have ticked well above its “normal” range.
In Q2 2024, PulteGroup posted a sales incentives rate of 6.3%, which would amount to roughly $31,500 in incentives on a $500,000 home sale.
In Q1 2025, PulteGroup posted a sales incentives rate of 8.0%, which would amount to roughly $40,000 in incentives on a $500,000 home sale.
In Q1 2026, PulteGroup’s sales incentives rate rose to 10.9%, equating to about $54,500 in incentives on a $500,000 home sale.
Without the larger incentives, PulteGroup insinuates that its decline in entry-level homebuyers would be even greater.
“Our ability to offer low fixed rate mortgages [via forward commitments/buydowns] and other incentives is certainly helping solve the affordability riddle for some, but this comes at a price as incentives in the quarter reach 10.9% of gross sales price,” PulteGroup CEO Ryan Marshall said on the company’s April 23, 2026 earnings call.
