LGI Homes (LGIH) is expected to see lower home sales volumes and continued competition, as well as mortgage rate buydowns, to pressure the company's margins, Wedbush said in a note Monday.

The company closed 1,323 homes in fiscal Q2, which was 20% lower than last year but slightly above Wedbush's estimate of 1,305, the investment firm said.

Wedbush maintained its fiscal Q2 and full-year 2025 forecasts unchanged ahead of LGI's earnings report scheduled for Aug. 5.

For the quarter, Wedbush said it expects a gross margin of 21.2%, which is 190 basis points below the consensus and 380 basis points below last year's margin.

Wedbush forecasts Q2 earnings at $1.09 per share on $480 million in revenue, below the consensus estimates of $1.46 per share and $519 million, according to the note.

Sales incentives such as rate buydowns and closing cost help are expected to remain in the 5% to 6% range in the near term, Wedbush analysts noted.

Wedbush maintained a neutral rating with a $93 price target.

Shares of the company were down about 4.3% in recent trading.

Price: 52.16, Change: -2.27, Percent Change: -4.17