Active Selling Communities: The Homebuilder Distribution Base

Active selling communities are homebuilder communities that are open for sales under the builder's stated methodology during or at the end of a reporting period.

They matter because order growth can come from two very different sources: more places to sell homes, or faster selling within each community.

Community count is the distribution base behind orders

A useful operating bridge is:

1Net Orders
2≈ Average Active Selling Communities
3× Net Orders per Community

Suppose a builder averages 100 selling communities and generates 3 net orders per community per month. Over a three-month quarter:

1100 communities × 3 orders × 3 months
2≈ 900 net orders

If communities rise to 110 while sales pace is unchanged, orders can grow roughly 10% without stronger demand at the community level.

That is why order growth should be decomposed into community growth and sales pace.

Average and ending community count are different

Homebuilders can disclose an average community count for the period, an ending count, or both.

The distinction matters. A community opened on the final day contributes to ending community count but almost nothing to the quarter's selling opportunity. Average community count is usually the better denominator for quarterly order pace.

M/I Homes, for example, explained in its June 2026 quarter that order growth reflected both a higher sales pace and a slightly higher average community count. Meritage Homes separately reported average active selling communities and period-end communities.

A community is not a fixed unit of capacity

Two communities are not necessarily economically equivalent.

Community productivity varies with:

• market and submarket;
• buyer segment;
• price point;
• lot availability;
• release cadence;
• product type;
• mortgage incentives;
• construction cycle time;
• community age; and
• whether the project is opening, mature, or winding down.

A builder can increase community count while total orders fall if new communities open slowly or existing communities lose momentum.

Openings and closeouts can distort the trend

Community count changes are not simply a measure of expansion.

A builder may open ten communities while closing out eight, producing only two net additions. A high-performing community can also sell out faster than expected, reducing future community count even though the underlying project was successful.

Land development and entitlement timing can delay planned openings, while acquisitions can add communities in a single step.

Investors should therefore separate:

1Beginning selling communities
2+ New openings / acquired communities
3- Sellouts / closures / dispositions
4= Ending selling communities

Community growth is not automatically revenue growth

New communities need time to ramp. Orders must convert into backlog and then closings before most home-sale revenue is recognized.

A rapidly growing community base can also require more land, development capital, model homes, sales staff, and construction inventory.

The economically useful question is not simply whether communities increased. It is whether the expanded selling base produces enough orders, gross margin, and inventory returns to justify the capital behind it.

Current filing examples

M/I Homes reported an average community count of 169 for the quarter ended June 30, 2026, up from 167 a year earlier, while sales pace increased to 1.8 orders per community per month. Meritage Homes reported 108 average active selling communities in its second quarter of 2026, versus 102 in the prior-year period, alongside a higher absorption rate.

Sources:

• M/I Homes Q3 2026 earnings release
• Meritage Homes Q2 2026 earnings release
• KB Home Q2 2026 Form 10-Q

Active selling communities are best treated as the size of the homebuilder's current sales network. Pair them with sales pace to determine whether order growth is coming from footprint expansion, stronger community productivity, or both.

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