United Homes Group Reports 13.7% Revenue Decline in Q1 2025

United Homes Group, Inc. (UHG) reported a decline in financial performance for the first quarter of 2025, with revenues totaling $87.0 million, down 13.7% from $100.8 million in the same period last year. The decrease in revenue was primarily attributed to a 19% drop in home closings, which fell from 311 to 252 units. Despite the decline in sales volume, the average sales price of homes increased by 2.9% to $344,784, reflecting a shift in product mix and pricing strategies. The company recorded a net income of $18.2 million, a decrease of 26.9% compared to $24.9 million in the prior year, influenced by a reduction in gross profit and changes in the fair value of derivative liabilities.

In terms of operational metrics, UHG experienced a significant reduction in net new orders, which fell by 22.9% to 296 units from 384 units year-over-year. The cancellation rate also increased to 12.7%, up from 9.6% in the previous year, indicating challenges in maintaining customer commitments amid a tough market environment. The company’s backlog decreased by 23.3% to 201 units, reflecting the impact of reduced sales activity and cancellations. UHG's active communities also declined by 20.6%, from 63 to 50, as the company navigated a challenging housing market characterized by high mortgage rates and economic uncertainty.

Strategically, UHG is focusing on enhancing its operational efficiencies and product offerings. The company is revising its portfolio of house plans and increasing customization options for buyers to stimulate sales. Additionally, UHG is implementing a strategic rebidding of supplier contracts to mitigate rising construction costs. The company continues to leverage its land-light strategy, which allows it to minimize financial risks associated with land ownership while maintaining flexibility in its operations. As of March 31, 2025, UHG had approximately 7,500 lots in its pipeline, which includes options from third-party developers and related parties.

Financially, UHG's total assets increased slightly to $266.2 million from $265.4 million at the end of 2024, while total liabilities decreased to $179.1 million from $198.5 million. The company’s cash and cash equivalents rose to $25.0 million, up from $22.6 million, indicating improved liquidity. UHG's debt structure includes a syndicated line of credit with an outstanding balance of $53.2 million and a term loan of $67.2 million, both of which carry variable interest rates. The company remains in compliance with all financial covenants associated with its debt agreements.

Looking ahead, UHG anticipates continued challenges in the housing market due to elevated mortgage rates and economic uncertainties. However, the company is optimistic about its strategic initiatives aimed at improving sales and profitability. Management believes that its proactive approach, combined with its adaptable business model, will enable UHG to navigate the current market conditions effectively and position the company for future growth.