Ashton Woods puts pace over margin in a choppy housing market

In today’s challenging homebuilding environment, builders are often presented with a lesser-of-evils choice: maintain a strong sales pace at the expense of slimmer margins, or sacrifice market share in favor of higher profitability. 

Multi-regional private homebuilding powerhouse Ashton Woods chose the former, increasing its community count and maintaining its sales and closings pace, according to a Q3 2026 quarterly report released earlier this week.

However, elevated incentives and difficult market conditions, combined with a slight shift to entry-level homes, put downward pressure on sales prices, profit margins and revenues. 

As many builders slow down their sales pace or shift away from entry-level homes in favor of a higher-margin product mix, Ashton Woods is taking an opposite approach. 

Maintaining a strong sales pace 

Ashton Woods, one of the largest private homebuilders in the United States, posted total revenues of $79.27 million, down roughly six percent from a year ago. Net income fell by a much larger 30 percent year-over-year. 

The builder’s home sales gross profit margin declined to 16.6%, down by 80 basis points compared to a year ago. Meanwhile, the average sales price of homes fell to $353,000, down from $361,000 from during Q3 2025. 

“When you think about the margins, the pressure really is coming from incentives, which is market-driven, as well as additional land costs coming through on our newer neighborhoods,” Zack Sawyer, CFO at Ashton Woods, said during a conference call held on Tuesday. 

During the call, CEO Ken Balogh acknowledged that demand was “choppy” to start the year. 

“We are seeing a nice spring season. Traffic has been up, just choppy. It’s been choppy for quite a while,” Balogh said. “Then you get to March, and we have this environment with rates going up. If you have the right incentives in place and the right inventory available to sell, we found that we’re still able to sell at a pretty strong pace.”

To that end, Ashton Woods kept sales and closings roughly on par with Q3 2025, while also increasing community count and backlog orders year over year. As Balogh stated, Ashton Woods employed generous incentives to maintain this strong sales pace and has continued to do so as mortgage rates spiked in March. 

“I think the biggest immediate impact to us has been that it costs a little more to buy some of our financing incentives to where they need to be,” he explained.

In pursuing a high sales pace, Ashton Woods has taken a page out of other “pace over price” builders, such as Smith Douglas Homes, Hovnanian Enterprises and Lennar. Conversely, Tri Pointe Homes, which specializes in move-up homes in top-tier locations, has decided to hold the line on pricing and incentives in exchange for a slower sales pace. 

The entry-level gambit

A deeper look at the quarterly report indicates that sales prices held roughly steady for both entry-level and move-up homes over the last year. However, the entry-level segment accounted for a slightly higher share of closings, which weighed on average selling prices. 

Backlog orders were strong at 1,945, compared to 1,606 a year ago. This increase was entirely due to an uptick in entry-level home orders, which now account for 52.4% of Ashton Woods’ backlog, compared to 48.4% a year ago. 

While a relatively small shift, the increasing entry-level share is notable, as those buyers are the most sensitive to mortgage rate spikes, affordability pressures and economic uncertainty. 

Executives didn’t comment on what led to this change, so it’s not clear if the growing emphasis on entry-level was incidental, market-driven or a concerted strategy. However, this shift runs counter to a broader industry trend, as some national homebuilders have deemphasized entry-level homes in favor of a more established buyer profile that offers higher margins. 

Beazer Homes, for example, plans to reduce its share of closings from home offerings priced below $500,000 by double digits by the end of fiscal year 2026. This is because incentives in those lower-priced communities are typically three to five points higher than in premium-priced communities. 

Hovnanian Enterprises is also selling through its low-margin, entry-level homes in peripheral submarkets as it works to emphasize a higher-margin, move-up product mix in sought-after locations. 

The vast majority of Ashton Woods’ entry-level closings came from Starlight Homes, its entry-level brand that largely emphasizes spec homes. 

Conversely, Ashton Woods’ move-up segment primarily focuses on built-to-order, semi-custom homes that offer personalization through a design studio. These houses typically provide higher margins due to a more resilient buyer profile and profitability-boosting upgrades. 

Margins fell, but by less than public competitors

Despite a growing entry-level share, Ashton Woods managed to hold the line on profit margins, which fell by 80 basis points over the last year. This was a more modest drop than most public builders experienced over the last year. For example:

Lennar: 350 basis points decline to 15.2%

Hovnanian Enterprises: 490 basis points decline to 13.4%

KB Home: 490 basis points decline to 15.3%

PulteGroup: 290 basis points decline to 24.7%

D.R. Horton: 230 basis points decline to 20.4%

Regional Emphasis

Ashton Woods operates in 18 metro areas across the Sun Belt, including in Georgia, Texas, Florida, North Carolina, South Carolina, Arizona and Tennesse. On the conference call, executives confirmed that the Phoenix, Dallas and Austin markets alone accounted for a combined 35 percent of their business. 

The builder is also expanding its footprint. Last year, Ashton Woods announced that it would expand into Colorado and the Denver market, with communities expected to open for sale this year. The company additionally bolstered its Florida operations with new communities in Jacksonville that are set to deliver in 2026.