M/I Homes trades margin for market share as spec sales rise

M/I Homes is trading some margin for sales growth, speed, and market share. Pair that spec-heavy operating model with an asset-light finished-lot supply, and the returns could become considerably stronger. M/I Homes is making a contrarian bet at a time when much of the homebuilding industry is becoming more cautious. While competitors are reducing speculative starts to protect margins and limit inventory exposure, M/I continues to put homes in the ground before buyers sign contracts. In the second quarter of 2026, 78% of its sales came from spec homes, and total sales increased 15% year over year. Gross margin declined from 24.7% to 22.0%. The straightforward interpretation is that M/I is buying volume through mortgage-rate buydowns, closing-cost assistance, and price incentives. There is some truth to that. Incentives are supporting demand, and the resulting pressure on margins is real. But that interpretation misses the broader strategic intelligence at play. M/I is not merely building more specs. Many builders do that. What M/I is doing is shortening the distance between a buyer’s decision and the delivery of a home. In today’s uncertain housing market, that may be one of the mo...