MI Homes is buying a second-quarter sales record with mortgage-rate buydowns and a spec-heavy playbook, and the earnings account is paying the bill. The Columbus builder converted affordability pressure into contracts while revenue and pretax profit both receded. The investment debate is whether a net-cash balance sheet and a captive mortgage shop can keep absorption alive until buyers need less subsidy, or whether incentives have reset mid-cycle earnings power for a longer stretch. That is a volume-versus-margin argument, not a going-concern story.
New contracts rose to 2387 while deliveries fell six percent. Average closing prices slipped as lot costs and buydowns widened, and homebuilding gross margin compressed by nearly three hundred basis points. Cancellations improved, which argues that subsidized locks are sticking once buyers sign. Spec homes still dominate the order book, so the company is converting standing inventory rather than rebuilding a richer to-be-built backlog. The mortgage subsidiary's capture rate hit a record, which is how the buydown machine actually works.
Shareholders' equity reached a record and homebuilding leverage stayed low after an S&P upgrade to BB+. Shares recently changed hands near $139, a thin premium to mid-year book. The next several quarters resolve whether planned community-count growth and a still-elevated spec mix restore earnings, or whether Tampa, Sarasota, and Austin keep forcing the incentive checkbook open. The equity only deserves a mid-cycle multiple if margins stop leaking.