Smith Douglas Homes Reports Q2 2025 Financial Results with Revenue Increase but Declining Net Income

Smith Douglas Homes Corp. reported its financial results for the second quarter of 2025, revealing a modest increase in home closing revenue to $223.9 million, up 1% from $220.9 million in the same period last year. The company closed 669 homes during the quarter, a 2% increase compared to 653 homes closed in the prior year. However, net income attributable to Smith Douglas Homes Corp. decreased to $2.4 million, down 35% from $3.6 million in the previous year, primarily due to rising costs and increased selling, general, and administrative expenses.

In the first half of 2025, home closing revenue reached $448.6 million, reflecting a 9% increase from $410.1 million in the same period of 2024. The increase was driven by a 10% rise in the number of homes closed, although the average sales price (ASP) remained relatively stable at $335, compared to $336 in the previous year. The company’s gross profit from home closings also saw a decline, with gross profit for the second quarter at $51.9 million, down 12% from $59.1 million in the same quarter of 2024, attributed to a 4% increase in average costs.

Strategically, Smith Douglas Homes completed the acquisition of Devon Street Homes on July 31, 2023, which contributed to its operational footprint. The company operates in key markets across the Southeastern and Southern United States, including Atlanta, Birmingham, and Nashville, and has expanded its controlled lots to 24,824 as of June 30, 2025, a 57% increase from the previous year. The company continues to focus on a land-light business model, primarily acquiring finished lots through option contracts, which helps mitigate financial risks associated with land ownership.

Operationally, the company reported a cancellation rate of 10% for the second quarter, a slight improvement from 12% in the same period last year. The backlog of homes at the end of the quarter stood at 858, down from 1,173 homes a year earlier, with a total contract value of $292.9 million. The company’s employee headcount has also increased, reflecting its growth strategy and operational demands.

Looking ahead, Smith Douglas Homes anticipates continued challenges in the housing market due to elevated mortgage rates and affordability concerns. The company plans to leverage financing incentives to attract buyers and maintain its growth trajectory. Management remains optimistic about long-term demand for new homes, driven by favorable demographic trends and a persistent housing undersupply, while acknowledging the potential impact of macroeconomic factors on its operations.