LGI Homes Shares Sink After 22% Plunge in 2025 Home Closings
The homebuilder fell significantly short of its annual guidance, signaling persistent demand headwinds for the entry-level housing market ahead of its earnings call.
LGI Homes (NASDAQ: LGIH) saw its shares fall in pre-market trading Tuesday after the company reported a severe drop in annual home closings, amplifying investor concerns about the health of the U.S. housing market.
The Texas-based homebuilder announced it closed 4,788 homes in 2025, a steep 22% decline from the 6,131 homes it closed in the prior year. The figure fell drastically short of the company's initial 2025 guidance, which had projected between 6,200 and 7,000 closings, according to a company press release.
The news adds to a difficult year for LGI Homes' stock, which has tumbled from a 52-week high of $97.25 to its current level of $43.86. The stock is now trading perilously close to its 52-week low of $39.70, reflecting deep investor pessimism.
LGI's business model, which focuses on constructing affordable homes for first-time buyers, makes it particularly vulnerable to the affordability crisis gripping the housing market. Persistently high interest rates and elevated home prices have squeezed entry-level buyers out of the market, directly impacting the builder's sales pipeline. The company's recent performance underscores this trend, with year-over-year quarterly revenue growth down a staggering 39.2%.
Underscoring the market's bearish sentiment, LGI Homes currently trades at a price-to-book ratio of just 0.48. This indicates that the company's market capitalization of approximately $963 million is less than half of the stated value of its assets on its balance sheet, a sign that investors may be bracing for further write-downs or a prolonged downturn.
Wall Street analysts remain divided on the company's prospects. Current ratings show a stark split, with one 'Strong Sell' and three 'Hold' ratings tempering a single 'Strong Buy' recommendation. The average analyst price target of $62.50 suggests potential upside, but one that seems distant given the operational headwinds revealed in the latest closing report.
In its announcement, LGI Homes also set a date for its fourth-quarter and full-year 2025 earnings conference call. Investors will be intensely focused on that event for any revised strategy from management to navigate the challenging environment. Key topics will include cost-cutting measures, inventory management, and, most critically, a realistic and achievable guidance for 2026. The company's path forward remains heavily dependent on the broader macroeconomic climate and any potential relief in mortgage rates.