PULTEGROUP INC/MI/ (PHM)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations are provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025.

The following is a summary of our operating results by line of business ($000's omitted, except per share data):

Demand conditions remained challenging through the second quarter of 2026 as the result of elevated mortgage interest rates, higher housing costs, and general economic uncertainty. Volatility in geopolitical conditions, in part due to tensions in the Middle East, has also negatively impacted inflation and interest rates, further weakening consumer confidence. We have continued responding to these conditions by adjusting production cadence and sales prices where necessary and focusing sales incentives on discounts on spec inventory (houses without customer orders), closing cost incentives, and mortgage interest rate buydowns. These pricing actions contributed to a 6% increase in net new orders in units, but lower average selling prices and gross margins, during the second quarter of 2026 compared to the prior year period. Closings decreased 8% in the second quarter of 2026 compared to the prior year period primarily due to a lower order backlog entering 2026 compared to 2025.

We expect that many homebuyers will continue to face affordability challenges. In response, we expect our sales incentives to remain elevated and for our pace of house starts to remain dynamic in response to market conditions. We have successfully lowered our mix of spec home inventory. However, we continue to face pressure in the cost of land acquisition and development. Due to the length of our land development and construction cycle times, there is a lag between when such cost changes occur and when they impact our operating results. Our gross margin from home sales decreased to 25.0% in the second quarter of 2026 versus 27.0% in the second quarter of 2025, but increased from 24.4% in the first quarter of 2026 after sequential quarterly declines since the beginning of 2025. These decreases since 2025 are primarily due to the aforementioned higher land costs, pricing actions, and elevated sales incentives in response to buyer affordability challenges and reducing our mix of spec inventory.

Although elevated mortgage interest rates and volatile macroeconomic and geopolitical conditions may persist for some time, we believe the demographics supporting housing demand remain favorable over the long term. Inventories of new and existing homes have increased in the majority of our geographies as a result of the weakened demand experienced this year, so we are taking a measured approach to our capital allocation strategy as we anticipate continued volatility in demand. Accordingly, we are focused on protecting liquidity and closely managing our cash flows while also continuing to emphasize shareholder returns, including the following actions:

–Emphasizing our lot optionality within our land pipeline for increased flexibility;

–Updating the underwriting for our land option contracts prior to buying additional land, and we have made decisions to walk away from a number of land option agreements;

–Working with our trade partners to update the costs for materials, labor, and services to reflect changes in market conditions;

–Adjusting our overhead cost structure as necessary to align with demand;

–Rebalancing our mix of spec versus sold home inventory to continue to service buyers seeking to close within 30 to 90 days while increasing our backlog of build-to-order homes;

–Maintaining a focus on shareholder return through share buybacks and dividends, including $681.2 million of share repurchases in the first six months of 2026 and an 18% increase in our quarterly dividends from $0.22 to $0.26 per share effective with our January 2026 dividend payment;

24

–Opportunistically extending and expanding our revolving credit facility while also issuing $800.0 million of senior notes at lower interest rates than the $589.1 million of senior notes repaid and redeemed in the first three months of 2026; and

–Maintaining ample liquidity.

We believe our strategic approach with respect to balancing sales price with sales pace, including actions taken related to sales incentives and our production cadence, will enable us to meet consumer demand at the selling prices necessary to turn our inventory, maintain market share, and generate healthy returns. We remain confident in our ability to navigate the future environment and to position the Company to take advantage of opportunities as they arise and support future growth while maintaining profitability and financial strength.

Homebuilding Operations

The following presents selected financial information for our Homebuilding operations ($000’s omitted):

(a)Includes the amortization of capitalized interest.

(b)Percentage not meaningful.

(c)Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders.

25

Home sale revenues

Home sale revenues in the three and six months ended June 30, 2026 were lower than the prior year periods by $460.9 million and $902.6 million, respectively. In the three months ended June 30, 2026, the 11% decrease resulted primarily from an 8% decrease in closings from the prior year period, combined with a 3% decrease in average selling price. In the six months ended June 30, 2026 the 11% decrease resulted primarily from an 8% decrease in closings, combined with a 4% decrease in average selling price. The decreases in closings were primarily attributable to a weaker order backlog entering the year, partially offset by a higher community count and improved production cycle times. Average selling price during the three and six months ended June 30, 2026 decreased primarily due to product and geographic mix, combined with efforts to reduce our level of spec inventory during 2026.

Home sale gross margins

Home sale gross margins were 25.0% and 24.7% in the three and six months ended June 30, 2026, respectively, compared with 27.0% and 27.2% in the three and six months ended June 30, 2025, respectively. The decreases in home sale gross margins were primarily attributable to the aforementioned pricing actions, including elevated sales incentives, and increased land acquisition and development costs. We expect these factors to continue to impact our gross margins over the near term. Gross margins for the first six months of 2026 were also unfavorably impacted by our efforts to reduce completed spec inventory to more appropriate levels.

Land sale and other revenues

We periodically elect to sell parcels of land to third parties in the event such assets no longer fit into our strategic operating plans or are zoned for commercial or other development. Land sale and other revenues and their related gains or losses vary between periods, depending on the timing of land sales and our strategic operating decisions. Land sale and other revenues contributed income of $10.8 million and $13.0 million for the three and six months ended June 30, 2026, respectively, compared with income of $4.1 million and $5.7 million for the three and six months ended June 30, 2025, respectively.

SG&A

SG&A as a percentage of home sale revenues was 10.1% and 10.7% in the three and six months ended June 30, 2026, respectively, compared with 9.1% and 9.8% for the three and six months ended June 30, 2025, respectively. The gross dollar amount of our SG&A decreased $7.5 million, or 2%, for the three months ended June 30, 2026 compared with the prior year period, and decreased $20.5 million, or 3%, for the six months ended June 30, 2026 compared with the prior year period. The decrease in gross dollars for the three and six months ended June 30, 2026 was primarily attributable to lower variable costs associated with the decrease in closings along with lower liability insurance costs. We expect to continue managing and balancing our overhead costs consistent with expected changes in the demand environment.

Other income (expense), net

Other income (expense), net includes the following ($000’s omitted):

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations are provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included in Item 8 in this Annual Report on Form 10-K. It also should be read in conjunction with the disclosure under “Special Notes Concerning Forward-Looking Statements” found in Item 7A of this Annual Report on Form 10-K. The following tables and related discussion set forth key operating and financial data as of and for the fiscal years ended December 31, 2025 and 2024. For similar operating and financial data and discussion of our fiscal 2024 results compared to our fiscal 2023 results, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 6, 2025.

The following is a summary of our operating results by line of business ($000's omitted, except per share data):

Overview

In 2025, consumer demand weakened due to ongoing affordability challenges, resulting from elevated mortgage interest rates and higher housing costs, as well as volatility in other macroeconomic and geopolitical conditions, including higher job losses and weakened consumer confidence. We have responded to these conditions by adjusting production cadence and sales prices where necessary and focusing sales incentives on discounts on spec inventory (houses without customer orders) and closing cost incentives, especially mortgage interest rate buydowns. Despite these efforts, net new orders in units decreased 4% in 2025 versus 2024.

We expect that many homebuyers will continue to face affordability challenges, so our sales paces may remain volatile on a monthly basis. In response, we expect our sales incentives to remain elevated and for our pace of house starts to remain dynamic. Additionally, we continue to face pressure in the cost of land acquisition and development. Due to the length of our land development and construction cycle times, there is a lag between when such cost changes occur and when they impact our operating results. This is evidenced in our gross margin from home sales, which decreased to 26.3% in 2025 versus 28.9% in 2024. Additionally, gross margin from home sales decreased each quarter in 2025, from 27.5% in the first quarter of 2025 to 24.7% in the fourth quarter of 2025. These decreases are primarily due to the aforementioned elevated sales incentives combined with higher land costs. While we expect to continue to generate healthy gross margins, they may decline somewhat in future periods as a result of these factors.

In response to the significant shift in market conditions in 2025, we have slowed the pace of our housing starts, have increased sales incentives, and are taking additional pricing actions in many of our communities, which resulted in $77.4 million of land inventory impairments in 2025. We continue to update the underwriting for our land option contracts prior to buying additional land and have made decisions to walk away from a number of land option agreements, which resulted in write-offs of deposits and pre-acquisition costs totaling $48.4 million in 2025. We will continue working with our trade partners to update the costs for materials, labor, and services to reflect changes in market conditions and will continue to adjust our overhead cost structure as necessary to align with demand.

Although elevated mortgage interest rates and volatile macroeconomic and geopolitical conditions may persist for some time, we believe the demographics supporting housing demand remain favorable over the long term. Inventories of new and existing homes have increased in the majority of our geographies as a result of the weakened demand experienced this year, so we are taking a measured approach to our capital allocation strategy as we anticipate continued volatility in demand. Accordingly, we

22

are focused on protecting liquidity and closely managing our cash flows while also continuing to emphasize shareholder returns, including the following actions:

–Increasing our lot optionality within our land pipeline for increased flexibility;

–Producing sufficient levels of spec inventory to service buyers seeking to close within 30 to 90 days;

–Maintaining a focus on shareholder return through dividends and share buybacks, including an 18% increase in our dividends from $0.22 to $0.26 per share effective with our January 2026 dividend payment and approving an additional $1.5 billion share repurchase authorization effective January 2025, bringing our total remaining share repurchase authorization to $1.0 billion as of December 31, 2025, after $1.2 billion of share repurchases in 2025; and

–Maintaining a modest leverage profile and ample liquidity.

We believe our strategic approach with respect to balancing sales price with sales pace, including actions taken related to sales incentives and our production cadence, will enable us to meet consumer demand at the selling prices necessary to turn our inventory, maintain market share, and generate healthy returns. We remain confident in our ability to navigate the future environment and to position the Company to take advantage of opportunities as they arise and support future growth and continued profitability and financial strength.

23

Homebuilding Operations

The following is a summary of income before income taxes for our Homebuilding operations ($000’s omitted):

(a)Includes the amortization of capitalized interest.

(b)Includes insurance reserve reversals of $42.3 million and $333.9 million in 2025 and 2024, respectively.

(c)Equity income from unconsolidated entities includes a gain of $39.5 million in 2024 related to the sale of our minority interest in a joint venture.

(d)Percentage not meaningful.

(e)See "Other income (expense), net" for a table summarizing significant items (Note 1).

(f)Net new order dollars represent a composite of new order dollars combined with other movements of the dollars in backlog related to cancellations and change orders.

24

Home sale revenues

Home sale revenues for 2025 were lower than 2024 by $575.0 million, or 3%. The decrease was attributable to a 5% decrease in closings, partially offset by a 2% increase in average selling price. The decrease in closings in 2025 was primarily attributable to lower net new orders in 2025 and a weaker order backlog entering the year, partially offset by a higher community count and improved production cycle times. Average selling price increased primarily due to product and geographic mix, including a slightly higher mix of closings toward our move-up buyers and in our Northeast segment, both of which carry a higher average selling price, partially offset by higher sales incentives.

Home sale gross margins

Home sale gross margins were 26.3% in 2025, compared with 28.9% in 2024. The lower home sale gross margins were primarily attributable to the aforementioned pricing actions we took in 2025, including elevated sales incentives, increased land acquisition and development costs, and higher land impairments as the result of the more challenging market conditions. We expect these factors to continue to impact our gross margins over the near term. Gross margins in 2025 were also unfavorably impacted by our efforts to reduce completed spec inventory to more appropriate levels, which we expect will continue to be an area of focus in 2026. While we have made significant progress in reducing the level of spec inventory during 2025, the level of completed spec inventory remains elevated for the current demand environment.

Land sale and other revenues

We periodically elect to sell parcels of land to third parties in the event such assets no longer fit into our strategic operating plans or are zoned for commercial or other development. Land sale and other revenues and their related gains or losses vary between periods, depending on the timing of land sales and our strategic operating decisions. Land sales and other revenues contributed income of $13.7 million and $5.5 million in 2025 and 2024, respectively.

SG&A

SG&A as a percentage of home sale revenues was 9.4% and 7.6% in 2025 and 2024, respectively. The gross dollar amount of our SG&A increased $252.7 million, or 19%, in 2025 compared with 2024. This increase resulted primarily from insurance reserve reversals of $42.3 million in 2025 compared to $333.9 million in 2024. Additionally, SG&A in 2025 reflects headcount and technology costs to support ongoing production volumes and investments for future growth. We expect to continue managing and balancing our overhead costs consistent with the demand environment.

Other income (expense), net

Other income (expense), net includes the following ($000’s omitted):

(a)Includes a gain of $17.5 million in 2024 related to the sale of a non-homebuilding property.

(b)Other income (expense), net includes impairments in 2025 resulting from our expected divestiture of certain manufacturing assets. The net assets and operating results related to such manufacturing assets are immaterial.

25

Net

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]