Dream Finders Homes (DFH -0.35%), a fast-growing U.S. homebuilder, posted its results for the second quarter of fiscal 2025 on July 31, 2025. The headline news: Earnings per share (GAAP) came in at $0.57, below the $0.61 expected and down sharply from the prior-year period. While the company saw a 10% increase in home closings and a 13% gain in net new orders, profit margins fell as costs and incentives climbed. Yet shrinking profits signal emerging pressures from input costs and the company’s evolving sales strategy.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.57 | $0.61 | $0.81 | (30.9%) |
| Revenue (GAAP) | $1.15 billion | $1.01 billion | $1.06 billion | 8.9% |
| Adjusted Homebuilding Gross Margin | 25.9% | N/A | 27.0% | (1.1) pp |
| Home Closings | 2,232 | N/A | 2,031 | 9.9% |
| Net New Orders | 1,938 | N/A | 1,712 | 13.2% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Recent Focus
Dream Finders Homes operates as a residential homebuilder, specializing in constructing and selling homes across fast-growing regions in the United States. The company’s core approach is an “asset-light” strategy, controlling land through options contracts instead of direct ownership, which limits up-front spending and enhances return on equity.
It has recently concentrated on expanding its reach in high-demand regions like Atlanta and the broader Southeast. The company has also prioritized growing its controlled lot pipeline, integrating financial services, and streamlining its construction supply chain. These strategies are key to sustaining growth and flexibility amid changing housing market dynamics.
Notable Developments During the Quarter
During the quarter, revenue (GAAP) rose above analyst forecasts by 3.3%, driven by a 10% jump in home closings and a 13% lift in net new orders compared to Q2 2024. Recent acquisitions, especially Liberty Communities, contributed 179 home closings at an average sales price of $355,550, supporting growth in more affordable segments.
The company’s gross margin took a significant hit, with homebuilding gross margin (GAAP) shrinking to 16.5% from 19.0%. Adjusted homebuilding gross margin also slid to 25.9% from 27.0% in Q2 2024. The erosion was attributed to greater use of incentive offers, a shift in the product mix, and higher input costs on land and financing. These factors outweighed cost-saving initiatives such as faster build times and supply chain efficiencies.
Selling, general, and administrative expenses climbed 39% to $135 million, now accounting for 12.3% of homebuilding revenue, up from 9.2% in Q2 2024. This uptick came mainly from costs connected to the mortgage commitment program, expansion-related compensation, and marketing. Despite the pressure on profit margins, the company’s financial services arm saw revenue soar to $50.9 million (GAAP), multiplying more than tenfold due to the integration of Alliant National Title Insurance Company and Jet HomeLoans. This boosted segment pre-tax income by 86% to $12 million.
On the supply side, Dream Finders Homes continued to ramp up its controlled lot pipeline, which reached 63,180 as of June 30, 2025, a 15% increase since December 31, 2024. Borrowings grew as the company funded inventory expansion using more leverage: Credit facility and borrowings hit $1.14 billion. However, this also nudged net homebuilding debt to net capitalization (non-GAAP) higher, now at 44.5% versus 42.7% for Q2 2024. Notably, backlog units dropped to 2,513 from 4,205 in Q2 2024, and backlog value fell to $1.2 billion.
Looking Ahead: Guidance and What to Watch
Management continued to forecast approximately 9,250 home closings for FY2025, with no change in forward guidance provided during the earnings release. This signals confidence in the company’s home closing pipeline and operational capability even as the housing market faces affordability issues and elevated interest rates.
For upcoming quarters, investors might want to monitor margin trends, home sales prices, incentive activity, and the company’s borrowing levels. Watch for any significant movements in the backlog and cancellation rates as leading indicators of market demand and the potential sustainability of recent sales momentum.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
