NVR INC

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

Consistent with the first quarter of 2024, demand for new homes remained solid in the second quarter of 2024 despite continued affordability issues driven by high mortgage interest rates and home prices. New home demand continues to be favorably impacted by a limited supply of homes in the resale market; however, we expect that affordability issues, inflationary pressures, interest rate volatility and economic uncertainty may weigh on future demand. We also expect to continue to face cost pressures related to building materials, labor and land costs which will impact profit margins based on our ability to manage these costs while balancing sales pace and home prices. Although we are unable to predict the extent to which this will impact our operational and financial performance, we believe that we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet and our disciplined lot acquisition strategy.

Current wording

Demand for new homes remained solid in the third quarter of 2024 despite continued affordability issues driven by high mortgage interest rates and home prices. New home demand continues to be favorably impacted by a limited supply of homes in the resale market; however, we expect that affordability issues, inflationary pressures, interest rate volatility and economic uncertainty may weigh on future demand. We also expect to continue to face cost pressures related to building materials, labor and land costs which we expect will impact profit margins based on our ability to manage these costs while balancing sales pace and home prices. Although we are unable to predict the extent to which this will impact our operational and financial performance, we believe that we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet and our disciplined lot acquisition strategy.

Previous wording

As of June 30, 2024, we controlled approximately 149,700 lots as described below.

Current wording

As of September 30, 2024, we controlled approximately 151,800 lots as described below.

Previous wording

We controlled approximately 142,300 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $673,900 and $10,400, respectively. Included in the number of controlled lots are approximately 9,700 lots for which we have recorded a contract land deposit impairment reserve of approximately $44,600 as of June 30, 2024.

Current wording

We controlled approximately 144,400 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $696,500 and $10,400, respectively. Included in the number of controlled lots are approximately 9,600 lots for which we have recorded a contract land deposit impairment reserve of approximately $47,700 as of September 30, 2024.

Previous wording

We had an aggregate investment totaling approximately $27,100 infour JVs, expected to produce approximately 5,150 lots. Of the lots to be produced by the JVs, approximately 4,800 lots were controlled by us and approximately 350 were either under contract with unrelated parties or currently not under contract. We had additional funding commitments totaling approximately $10,600 to one of the JVs as of June 30, 2024.

Current wording

We had an aggregate investment totaling approximately $27,800 in three JVs, expected to produce approximately 5,150 lots. Of the lots to be produced by the JVs, approximately 4,800 lots were controlled by us and approximately 350 were either under contract with unrelated parties or currently not under contract. We had additional funding commitments totaling approximately $9,800 to one of the JVs as of September 30, 2024.

Previous wording

We owned land with a carrying value of approximately $61,500 that will be developed into approximately 2,600 finished lots.

Current wording

We owned land with a carrying value of approximately $63,300 that will be developed into approximately 2,600 finished lots.

Previous wording

In addition, we have certain properties under contract with land owners that are expected to yield approximately 30,400 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. As of June 30, 2024, these properties are controlled with deposits in cash totaling approximately $17,000, of which approximately $4,300 is refundable if certain contractual conditions are not met. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.

Current wording

In addition, we have certain properties under contract with land owners that are expected to yield approximately 38,200 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. As of September 30, 2024, these properties are controlled with deposits in cash totaling approximately $19,700, of which approximately $5,100 is refundable if certain contractual conditions are not met. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.

Previous wording

Our consolidated revenues for the second quarter of 2024 totaled $2,612,457, a 12% increase from the second quarter of 2023. Net income for the second quarter ended June 30, 2024 was $400,904, or $120.69 per diluted share. For the second quarter ended June 30, 2024, net income decreased 1% and diluted earnings per share increased 4% when compared to net income and diluted earnings per share for the second quarter of 2023, respectively. Our homebuilding gross profit margin percentage decreased to 23.6% in the second quarter of 2024 from 24.3% in the second quarter of 2023. New orders, net of cancellations (“New Orders”) increased by 3% in the second quarter of 2024 compared to the second quarter of 2023. The New Order cancellation rate for the second quarter of 2024 increased to 12.9% from 10.9% in the same period in 2023. The average sales price for New Orders in the second quarter of 2024 was $458.8, an increase of 3% compared to the second quarter of 2023.

Current wording

Our consolidated revenues for the third quarter of 2024 totaled $2,732,951, a 6% increase from the third quarter of 2023. Net income for the third quarter ended September 30, 2024 was $429,323, or $130.50 per diluted share. For the third quarter ended September 30, 2024, net income decreased 1% and diluted earnings per share increased 4% when compared to net income and diluted earnings per share for the third quarter of 2023, respectively. Our homebuilding gross profit margin percentage decreased to 23.4% in the third quarter of 2024 from 24.3% in the third quarter of 2023. New orders, net of cancellations (“New Orders”) increased by 19% in the third quarter of 2024 compared to the third quarter of 2023. The New Order cancellation rate for the third quarter of 2024 increased to 14.5% from 13.6% in the same period in 2023. The average sales price for New Orders in the third quarter of 2024 was $450.7, a decrease of 1% compared to the third quarter of 2023.

Previous wording

Homebuilding revenues increased 12% in the second quarter of 2024 compared to the same period in 2023, primarily as a result of an 11% increase in the number of units settled. The increase in settlements was primarily attributable to a 7% higher backlog unit balance entering the second quarter of 2024 compared to the backlog unit balance entering the second quarter of 2023, coupled with a higher backlog turnover rate quarter over quarter. Gross profit margin percentage in the second quarter of 2024 decreased to 23.6%, from 24.3% in the second quarter of 2023. Gross profit margin was negatively impacted by higher lot and closing costs quarter over quarter.

Current wording

Homebuilding revenues increased 7% in the third quarter of 2024 compared to the same period in 2023, primarily as a result of a 5% increase in the number of units settled. The increase in settlements was primarily attributable to a 3% higher backlog unit balance entering the third quarter of 2024 compared to the backlog unit balance entering the third quarter of 2023, coupled with a higher backlog turnover rate quarter over quarter. Gross profit margin percentage in the third quarter of 2024 decreased to 23.4%, from 24.3% in the third quarter of 2023. Gross profit margin was negatively impacted by higher lot costs and closing cost assistance quarter over quarter.

Previous wording

Selling, general and administrative (“SG&A”) expense in the second quarter of 2024 decreased by approximately $7,300 compared to the second quarter of 2023, and as a percentage of revenue decreased to 5.5% from 6.5% quarter over quarter. The decrease in SG&A expense was primarily attributable to a decrease of approximately $6,800 in equity-based compensation quarter over quarter due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Current wording

5.7% quarter over quarter. The increase in SG&A expense was primarily attributable to a $7,000 increase in personnel costs attributable to an increase in headcount quarter over quarter. Additionally, sales and marketing expenses were approximately $3,300 higher quarter over quarter due to an increase in model home related expenses. These increases in SG&A expense were partially offset by a $6,600 decrease in equity-based compensation quarter over quarter due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Previous wording

Homebuilding revenues increased 9% in the first six months of 2024 compared to the same period in 2023, as a result of an 11% increase in the number of units settled, offset partially by a 1% decrease in the average settlement price year over year. The increase in settlements was attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Gross profit margin percentage in the first six months of 2024 decreased to 24.0% from 24.4% in the first six months of 2023. Gross profit margin was negatively impacted by higher lot and closing costs year over year.

Current wording

Homebuilding revenues increased 8% in the first nine months of 2024 compared to the same period in 2023, primarily as a result of a 9% increase in the number of units settled. The increase in settlements was attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Gross profit margin percentage in the first nine months of 2024 decreased to 23.8% from 24.4% in the first nine months of 2023. Gross profit margin was negatively impacted by higher lot costs and closing cost assistance year over year.

Previous wording

SG&A expense in the first six months of 2024 increased by approximately $1,600 compared to the same period in 2023, and as a percentage of revenue decreased to 6.1% in 2024 from 6.6% in 2023. The increase in SG&A expense was primarily attributable to a $7,200 increase in personnel costs attributable to an increase in headcount year over year. Additionally, sales and marketing expenses were approximately $4,000 higher year over year due to an increase in model home related expenses. These increases in SG&A expense were partially offset by an $11,100 decrease in equity-based compensation year over year due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Current wording

SG&A expense in the first nine months of 2024 increased by approximately $8,600 compared to the same period in 2023, and as a percentage of revenue decreased to 5.9% in 2024 from 6.3% in 2023. The increase in SG&A expense was primarily attributable to a $14,500 increase in personnel costs attributable to an increase in headcount year over year. Additionally, sales and marketing expenses were approximately $7,200 higher year over year due to an increase in model home related expenses. These increases in SG&A expense were partially offset by a $17,700 decrease in equity-based compensation year over year due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Previous wording

New Orders and the average sales price of New Orders both increased 3% in the first six months of 2024 compared to the same period in 2023. New Orders were favorably impacted by a 2% increase in the average number of active communities year over year. The increase in the average sales price of New Orders is attributable to a relative shift to higher priced markets and communities in certain of our reporting segments as discussed in the respective segments below.

Current wording

New Orders and the average sales price of New Orders increased 7% and 2%, respectively, in the first nine months of 2024 compared to the same period in 2023. New Orders were favorably impacted primarily by a higher sales absorption rate year over year. The increase in the average sales price of New Orders is primarily attributable to a relative shift to higher priced markets and communities in certain of our reporting segments as discussed in the respective segments below.

Previous wording

Our backlog represents homes sold but not yet settled with our customers. As of June 30, 2024, our backlog increased on a unit basis by 3% to 11,597 units and on a dollar basis by 6% to $5,454,470 when compared to 11,231 units and $5,150,347, respectively, as of June 30, 2023. The increase in the number of backlog units was primarily attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Backlog dollars were higher primarily due to the increase in backlog units year over year, coupled with a 3% increase in the average sales price of New Orders for the six month period ended June 30, 2024 compared to the same period in 2023.

Current wording

Our backlog represents homes sold but not yet settled with our customers. As of September 30, 2024, our backlog increased on a unit basis by 9% to 11,339 units and on a dollar basis by 11% to $5,323,366 when compared to 10,371 units and $4,802,807, respectively, as of September 30, 2023. The increase in the number of backlog units was primarily attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Backlog dollars were higher primarily due to the increase in backlog units year over year.

Previous wording

Our backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period. Calculated as the total of all cancellations during the period as a percentage of gross sales during that same period, our cancellation rate was approximately 13% and 12% in the first six months of 2024 and 2023, respectively. During the most recent four quarters, approximately 4% of a reporting quarter’s opening backlog cancelled during the fiscal quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur during the remainder of 2024 or future years. Other than those units that are cancelled, we expect to settle substantially all of our June 30, 2024 backlog within the next twelve months.

Current wording

Our backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period. Calculated as the total of all cancellations during the period as a percentage of gross sales during that same period, our cancellation rate was approximately 14% and 13% in the first nine months of 2024 and 2023, respectively. During the most recent four quarters, approximately 5% of a reporting quarter’s opening backlog cancelled during the fiscal quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur during the remainder of 2024 or future years. Other than those units that are cancelled, we expect to settle substantially all of our September 30, 2024 backlog within the next twelve months.

Previous wording

The following tables summarize certain homebuilding operating activity by reportable segment for the three and six months ended June 30, 2024 and 2023.

Current wording

The following tables summarize certain homebuilding operating activity by reportable segment for the three and nine months ended September 30, 2024 and 2023.

Previous wording

Segment New Orders decreased 2%, while the average sales price of New Orders increased 3% in the second quarter of 2024 compared to the second quarter of 2023. New Orders were negatively impacted by a 10% decrease in the average number of active communities quarter over quarter, offset partially by favorable market conditions which led to a higher sales absorption rate in the second quarter of 2024. The increase in the average sales price of New Orders was favorably impacted by a shift in New Orders to higher priced communities within certain markets in the segment quarter over quarter.

Current wording

Segment New Orders increased 21%, while the average sales price of New Orders decreased 2% in the third quarter of 2024 compared to the third quarter of 2023. Despite a 12% decrease in the average number of active communities quarter over quarter, New Orders were favorably impacted by a higher sales absorption rate in the third quarter of 2024. The decrease in the average sales price of New Orders was primarily attributable to a shift to lower priced communities within certain markets in the segment quarter over quarter.

Previous wording

The Mid Atlantic segment had an approximate $44,800, or 13%, increase in segment profit in the first six months of 2024 compared to the first six months of 2023. The increase in segment profit was driven by an increase in segment revenues of approximately $151,200, or 8%, coupled with an increase in gross profit margins. Segment revenues increased due to a 9% increase in the number of units settled which was primarily attributable to an 11% higher backlog unit balance entering 2024 compared to backlog entering 2023. The segment’s gross profit margin percentage increased to 25.2% in the first six months of 2024 from 24.7% in the first six months of 2023. Gross profit margins were positively impacted primarily by the improved leveraging of certain operating costs attributable to the increase in settlement activity, offset partially by higher lot and closing costs year over year.

Current wording

The Mid Atlantic segment had an approximate $46,100, or 8%, increase in segment profit in the first nine months of 2024 compared to the first nine months of 2023. The increase in segment profit was driven by an increase in segment revenues of approximately $152,500, or 5%, coupled with an increase in gross profit margins. Segment revenues increased due to a 6% increase in the number of units settled which was primarily attributable to an 11% higher backlog unit balance entering 2024 compared to backlog entering 2023. The segment’s gross profit margin percentage increased to 25.2% in the first nine months of 2024 from 24.7% in the first nine months of 2023. Gross profit margins were positively impacted primarily by the improved leveraging of certain operating costs attributable to the increase in settlement activity, offset partially by higher lot costs and closing cost assistance year over year.

Previous wording

Segment New Orders remained relatively flat in the first six months of 2024 compared to the first six months of 2023, while the average sales price of New Orders increased 2% year over year. New Orders were negatively impacted by a 7% decrease in the average number of active communities quarter over quarter, offset by favorable market conditions which led to a higher sales absorption rate year over year. The increase in the average sales price of New Orders was favorably impacted by a shift in New Orders to higher priced communities within certain markets in the segment year over year.

Current wording

Segment New Orders increased 6% in the first nine months of 2024 compared to the first nine months of 2023, while the average sales price of New Orders remained relatively flat. Despite an 8% decrease in the average number of active communities year over year, New Orders were favorably impacted by a higher sales absorption rate year over year.

Previous wording

Segment New Orders and the average sales price of New Orders increased 3% and 12%, respectively, in the second quarter of 2024 compared to the second quarter of 2023. Despite a 14% decrease in the average number of active communities quarter over quarter, New Orders were favorably impacted by favorable market conditions which led to a higher sales absorption rate quarter over quarter. The increase in the average sales price of New Orders was attributable to a shift in New Orders to higher priced markets within the segment, coupled with a shift to higher priced communities in certain markets quarter over quarter.

Current wording

Segment New Orders and the average sales price of New Orders increased 20% and 10%, respectively, in the third quarter of 2024 compared to the third quarter of 2023. Despite a 12% decrease in the average number of active communities quarter over quarter, New Orders were favorably impacted by a higher sales absorption rate quarter over quarter. The increase in the average sales price of New Orders was primarily attributable to a shift to higher priced communities in certain markets quarter over quarter.

Previous wording

The North East segment had an approximate $24,200, or 31%, increase in segment profit in the first six months of 2024 compared to the first six months of 2023. Segment profits were favorably impacted by an increase in segment revenue of approximately $126,600, or 30%. Segment revenues were favorably impacted by a 20% increase in the number of units settled and a 9% increase in the average settlement price year over year. The increase in settlements was primarily attributable to a 16% higher backlog unit balance entering 2024 compared to backlog entering 2023, coupled with a higher backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 9% higher average sales price of units in backlog entering 2024 compared to backlog entering 2023. The segment's gross profit margin percentage decreased to 26.4% in the first six months of 2024 from 27.0% in the first six months of 2023. Gross profit margin was negatively impacted primarily by higher lot and closing costs, offset partially by improved leveraging of certain operating costs as settlement activity increased.

Current wording

The North East segment had an approximate $31,700, or 25%, increase in segment profit in the first nine months of 2024 compared to the first nine months of 2023. Segment profits were favorably impacted by an increase in segment revenue of approximately $158,900, or 23%. Segment revenues were favorably impacted by a 14% increase in the number of units settled and a 8% increase in the average settlement price year over year. The increase in settlements was primarily attributable to a 16% higher backlog unit balance entering 2024 compared to backlog entering 2023, coupled with a higher backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 9% higher average sales price of units in backlog entering 2024 compared to backlog entering 2023. The segment's gross profit margin percentage was flat year over year.

Previous wording

Segment New Orders and the average sales price of New Orders increased 11% and 9%, respectively, in the first six months of 2024 compared to the first six months of 2023. Despite a 11% decrease in the average number of active communities year over year, New Orders were favorably impacted by favorable market conditions which led to a higher sales absorption rate year over year. The increase in the average sales price of New Orders was attributable to a shift in New Orders to higher priced markets within the segment, coupled with a shift to higher priced communities in certain markets year over year.

Current wording

Segment New Orders and the average sales price of New Orders increased 14% and 10%, respectively, in the first nine months of 2024 compared to the first nine months of 2023. Despite an 11% decrease in the average number of active communities year over year, New Orders were favorably impacted by a higher sales absorption rate year over year. The increase in the average sales price of New Orders was primarily attributable to a shift to higher priced communities in certain markets year over year.

Previous wording

The Mid East segment had an approximate $1,800, or 3%, increase in segment profit in the second quarter of 2024 compared to the second quarter of 2023, due primarily to an increase in segment revenues of approximately $22,300, or 5%. Segment revenues were favorably impacted primarily by a 5% increase in the average price of homes settled quarter over quarter, due primarily to a 7% higher average sales price of units in backlog entering the second quarter of 2024 compared to backlog entering the second quarter of 2023. The segment's gross profit margin percentage remained relatively flat quarter over quarter.

Current wording

The Mid East segment had an approximate $6,200, or 8%, increase in segment profit in the third quarter of 2024 compared to the third quarter of 2023, due primarily to an increase in segment revenues of approximately $32,500, or 7%, coupled with an increase in gross profit margins to 22.8% in the the third quarter of 2024 from 22.2% in the third quarter of 2023. Segment revenues were favorably impacted by a 6% increase in the average price of homes settled quarter over quarter, due to a 6% higher average sales price of units in backlog entering the third quarter of 2024 compared to backlog entering the third quarter of 2023. The segment's gross profit margin percentage was favorably impacted by the higher average settlement prices and lower lumber costs quarter over quarter, offset partially by higher lot costs and closing cost assistance.

Previous wording

The Mid East segment had an approximate $11,800, or 10%, increase in segment profit in the first six months of 2024 compared to the first six months of 2023, due primarily to an increase in segment revenues of approximately $36,900, or 5%, coupled with an increase in gross profit margins to 22.2% in the first six months of 2024 from 21.5% in the first six months of 2023. Segment revenues increased primarily due to a 3% increase in the number of units settled year over year. The increase in settlements was attributable primarily to a 7% higher backlog unit balance entering 2024 compared to the backlog entering 2023, offset partially by a lower backlog turnover rate period over period. Gross profit margin was favorably impacted by the improved leveraging of certain operating costs as settlement activity increased, offset partially by higher lot and closing costs year over year.

Current wording

The Mid East segment had an approximate $18,000, or 9%, increase in segment profit in the first nine months of 2024 compared to the first nine months of 2023, due primarily to an increase in segment revenues of approximately $69,300, or 5%, coupled with an increase in gross profit margins to 22.4% in the first nine months of 2024 from 21.7% in the first nine months of 2023. Segment revenues increased due to a 3% increase in the average price of units settled and a 2% increase in the number of units settled year over year. The increase in the average settlement price was attributable primarily to the 6% increase in the average settlement price in the third quarter of 2024 as discussed above. The increase in settlements was attributable primarily to a 7% higher backlog unit balance entering 2024 compared to the backlog entering 2023. Gross profit margin was favorably impacted by the improved leveraging of certain operating costs as settlement activity increased, offset partially by higher lot costs and closing cost assistance year over year.

Previous wording

Segment New Orders decreased 5% in the first six months of 2024 compared to the first six months of 2023, while the average sales price of New Orders increased 5% year over year. New Orders were negatively impacted by an 11% decrease in the number of active communities year over year, offset partially by favorable market conditions which led to a higher sales absorption rate year over year. The increase in the average sales price of New Orders was primarily attributable to a shift in New Orders to higher priced communities in certain markets year over year.

Current wording

Segment New Orders increased 2% in the first nine months of 2024 compared to the first nine months of 2023, while the average sales price of New Orders increased 3% year over year. Despite a 10% decrease in the average number of active communities year over year, New Orders were favorably impacted by a higher sales absorption rate year over year. The increase in the average sales price of New Orders was primarily attributable to a shift to higher priced communities within certain markets year over year.

Previous wording

The South East segment had an approximate $12,200, or 11%, decrease in segment profit in the second quarter of 2024 compared to the second quarter of 2023. The decrease in segment profit was primarily driven by a decrease in gross profit margins to 22.2% in the second quarter of 2024 from 26.2% in the second quarter of 2023. Gross profit margins were negatively impacted primarily by higher lot and closing costs. Segment revenues in the second quarter of 2024 were higher by approximately $112,500, or 19%, due to a 22% increase in the number of units settled. The increase in settlements is attributable to a 12% higher backlog unit balance entering the second quarter of 2024 compared to the backlog unit balance entering the second quarter of 2023, coupled with a higher backlog turnover rate quarter over quarter.

Current wording

The South East segment had an approximate $12,600, or 12%, decrease in segment profit in the third quarter of 2024 compared to the third quarter of 2023. The decrease in segment profit was primarily driven by a decrease in gross profit margins to 21.9% in the third quarter of 2024 from 24.9% in the third quarter of 2023. Gross profit margins were negatively impacted primarily by higher lot costs and closing cost assistance. Segment revenues in the third quarter of 2024 were higher by approximately $99,200, or 16%, due to primarily to a 14% increase in the number of units settled. The increase in settlements is attributable primarily to a 9% higher backlog unit balance entering the third quarter of 2024 compared to the backlog entering the third quarter of 2023, coupled with a higher backlog turnover rate quarter over quarter.

Previous wording

Segment New Orders increased 16% in the second quarter of 2024 compared to the second quarter of 2023, while the average sales price of New Orders remained relatively flat quarter over quarter. New Orders were favorably impacted by a 35% increase in the average number of active communities, offset partially by a lower absorption rate within the segment quarter over quarter.

Current wording

Segment New Orders increased 16% in the third quarter of 2024 compared to the third quarter of 2023, while the average sales price of New Orders decreased 5% quarter over quarter. New Orders were favorably impacted by a 22% increase in the average number of active communities, offset partially by a 6% lower absorption rate within the segment quarter over quarter. The decrease in the average sales price of New Orders was primarily attributable to a shift to lower priced communities in certain markets within the segment quarter over quarter.

Previous wording

The South East segment had an approximate $46,200, or 20%, decrease in segment profit in the first six months of 2024 compared to the first six months of 2023 due primarily to a decrease in gross profit margins to 23.3% in the first six months of 2024 from 27.0% in the first six months of 2023. Gross profit margins were negatively impacted primarily by higher lot and closing costs. Segment revenues in the second quarter of 2024 were higher by approximately $104,200, or 9%, due to a 15% increase in the number of units settled, partially offset by a 6% decrease in the average price of units settled year over year. The increase in settlements was attributable primarily to a 15% higher backlog balance entering 2024 compared to the backlog entering 2023. The decrease in the average settlement price was attributable primarily to a 7% lower average sales price of units in backlog entering 2024 compared to backlog entering 2023.

Current wording

The South East segment had an approximate $58,800, or 17%, decrease in segment profit in the first nine months of 2024 compared to the first nine months of 2023 due primarily to a decrease in gross profit margins to 22.8% in the first nine months of 2024 from 26.3% in the first nine months of 2023. Gross profit margins were negatively impacted primarily by higher lot costs and closing cost assistance. Segment revenues in the third quarter of 2024 were higher by approximately $203,500, or 11%, due to a 15% increase in the number of units settled, partially offset by a 3% decrease in the average price of units settled year over year. The increase in settlements was attributable primarily to a 15% higher backlog balance entering 2024 compared to the backlog entering 2023, coupled with a higher backlog turnover rate year over year. The decrease in the average settlement price was attributable primarily to a 7% lower average sales price of units in backlog entering 2024 compared to backlog entering 2023.

Previous wording

Segment New Orders and the average sales price of New Orders increased 10% and 1%, respectively, in the first six months of 2024 compared to the first six months of 2023. The increase in New Orders was primarily attributable to a 35% increase in the average number of active communities, offset partially by a lower absorption rate within the segment year over year.

Current wording

Segment New Orders increased 12% in the first nine months of 2024 compared to the first nine months of 2023, while the average sales price of New Orders decreased 1% year over year. The increase in New Orders was primarily attributable to a 30% increase in the average number of active communities, offset partially by a 14% lower absorption rate within the segment year over year.

Previous wording

(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of lot deposit impairment charges in Note 2 in the accompanying condensed consolidated financial statements.

Current wording

(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to our reportable segments. See further discussion of lot deposit impairment charges in Note 2 in the accompanying condensed consolidated financial statements.

Previous wording

(2)The decrease in equity-based compensation expense for the three and six-month periods ended June 30, 2024 was primarily attributable to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Current wording

(2)The decrease in equity-based compensation expense for the three and nine-month periods ended September 30, 2024 was primarily attributable to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Previous wording

We conduct our mortgage banking activity through NVR Mortgage Finance, Inc. (“NVRM”), a wholly owned subsidiary. NVRM focuses exclusively on serving the homebuilding segment's customers. NVRM sells almost all of the mortgage loans it closes to investors in the secondary markets on a servicing-released basis, typically within 30 days from the loan closing. The following table summarizes the results of our mortgage banking operations and certain statistical data for the three and six months ended June 30, 2024 and 2023:

Current wording

We conduct our mortgage banking activity through NVR Mortgage Finance, Inc. (“NVRM”), a wholly owned subsidiary. NVRM focuses exclusively on serving the homebuilding segment's customers. NVRM sells almost all of the mortgage loans it closes to investors in the secondary markets on a servicing-released basis, typically within 30 days from the loan closing. The following table summarizes the results of our mortgage banking operations and certain statistical data for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Loan closing volume for the three and six months ended June 30, 2024 increased by approximately $148,400, or 11%, and $289,200, or 11%, respectively, from the same periods in 2023. The increase in loan closing volume during both the three and six months ended June 30, 2024 was primarily attributable to the 11% increase in the homebuilding segment’s number of units settled for both the three and six months ended June 30, 2024, when compared to the same periods in 2023.

Current wording

Loan closing volume for the three and nine months ended September 30, 2024 increased by approximately $34,900, or 2%, and $324,100, or 8%, respectively, from the same periods in 2023. The increase in loan closing volume during both the three and nine months ended September 30, 2024 was primarily attributable to the 5% and 9% increases in the homebuilding segment’s number of units settled for the three and nine months ended September 30, 2024, respectively, when compared to the same periods in 2023. The favorable impact of higher homebuilding settlements on loan closing volume during the third quarter of 2024 was partially offset by a lower capture rate quarter over quarter.

Previous wording

Segment profit for the six months ended June 30, 2024 increased by approximately $8,600, or 13%, from the same period in 2023. This increase was primarily attributable to increases of approximately $10,300, or 10%, in mortgage banking fees due to an increase in gains on sales of loans. This increase was partially offset by an increase in general and administrative expenses of approximately $4,100, or 10%, during the six months ended June 30, 2024 due primarily to an increase in personnel costs.

Current wording

Segment profit for the three months ended September 30, 2024 decreased by approximately $3,800, or 9%, from the same period in 2023. This decrease was attributable to an increase in general and administrative expenses and a decrease in mortgage banking fees. General and administrative expenses increased by approximately $2,400, or 11%, from the same period in 2023, primarily due to an increase in personnel costs. Mortgage banking fees decreased by approximately $1,300, or 2%, which was primarily due to a decrease in gains on sales of loans.

Previous wording

Segment profit for the three months ended June 30, 2024 increased by approximately $8,400, or 22%, from the same period in 2023. This increase was primarily attributable to an increase of approximately $10,000, or 18%, in mortgage banking fees due to an increase in gains on sales of loans. This increase was partially offset by an increase in general and administrative expenses of approximately $2,700, or 12%, during the three months ended June 30, 2024 due primarily to an increase in personnel costs.

Current wording

Segment profit for the nine months ended September 30, 2024 increased by approximately $4,900, or 5%, from the same period in 2023. This increase was primarily attributable to an increase of approximately $9,000, or 6%, in mortgage banking fees due to an increase in gains on sales of loans. This increase was partially offset by an increase in general and administrative expenses of approximately $6,600, or 10%, during the nine months ended September 30, 2024, which was primarily due to an increase in personnel costs.

Previous wording

Our effective tax rate for the three and six months ended June 30, 2024 was 24.9% and 20.8%, respectively, compared to 14.3% and 17.3% for the three and six months ended June 30, 2023, respectively. The increase in the effective tax rate in the three and six month periods of 2024 compared to the same periods in 2023 was primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $6,800 and $50,600 for the three and six months ended June 30, 2024, respectively, and approximately $55,900 and $79,200 for the three and six months ended June 30, 2023, respectively.

Current wording

Our effective tax rate for the three and nine months ended September 30, 2024 was 20.3% and 20.6%, respectively, compared to 19.7% and 18.2% for the three and nine months ended September 30, 2023, respectively. The increase in the effective tax rate in the three and nine month periods of 2024 compared to the same periods in 2023 was primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $23,100 and $73,700 for the three and nine months ended September 30, 2024, respectively, and approximately $31,900 and $111,000 for the three and nine months ended September 30, 2023, respectively.

Previous wording

We fund our operations primarily from our current cash holdings and cash flows generated by operating activities. In addition, we have available a short-term unsecured working capital revolving credit facility and revolving mortgage repurchase facility, as further described below. As of June 30, 2024, we had approximately $2,500,000 in cash and cash equivalents, approximately $283,900 in unused committed capacity under our revolving credit facility and $150,000 in unused committed capacity under our revolving mortgage repurchase facility.

Current wording

We fund our operations primarily from our current cash holdings and cash flows generated by operating activities. In addition, we have available a short-term unsecured working capital revolving credit facility and revolving mortgage repurchase facility, as further described below. As of September 30, 2024, we had approximately $2,500,000 in cash and cash equivalents, approximately $282,900 in unused committed capacity under our revolving credit facility and $150,000 in unused committed capacity under our revolving mortgage repurchase facility.

Previous wording

(ii) Payment obligations totaling approximately $444,000 under existing LPAs for deposits to be paid to land developers, assuming that contractual development milestones are met by the developers and we exercise our option to acquire finished lots under those LPAs. We expect to make the majority of these payments within the next three years.

Current wording

(ii) Payment obligations totaling approximately $485,000 under existing LPAs for deposits to be paid to land developers, assuming that contractual development milestones are met by the developers and we exercise our option to acquire finished lots under those LPAs. We expect to make the majority of these payments within the next three years.

Previous wording

In addition to funding growth in our homebuilding and mortgage banking operations, we historically have used a substantial portion of our excess liquidity to repurchase outstanding shares of our common stock in open market and privately negotiated transactions. This ongoing repurchase program assists us in accomplishing our primary objective, creating increases in shareholder value. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, of this Quarterly Report on Form 10-Q for further discussion of repurchase activity during the second quarter of 2024. For the six months ended June 30, 2024, we repurchased 150,026 shares of our common stock at an aggregate purchase price of $1,135,912. As of June 30, 2024, we had approximately $1,040,000 available under Board approved repurchase authorizations.

Current wording

In addition to funding growth in our homebuilding and mortgage banking operations, we historically have used a substantial portion of our excess liquidity to repurchase outstanding shares of our common stock in open market and privately negotiated transactions. This ongoing repurchase program assists us in accomplishing our primary objective, creating increases in shareholder value. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, of this Quarterly Report on Form 10-Q for further discussion of repurchase activity during the third quarter of 2024. For the nine months ended September 30, 2024, we repurchased 192,655 shares of our common stock at an aggregate purchase price of $1,493,362. As of September 30, 2024, we had approximately $682,507 available under a Board approved repurchase authorization.

Previous wording

We have an unsecured revolving credit agreement (the "Credit Agreement") with a group of lenders which may be used for working capital and general corporate purposes. The Credit Agreement provides for aggregate revolving loan commitments of $300,000 (the "Facility"). Under the Credit Agreement, we may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. In addition, the Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately $16,100 outstanding as of June 30, 2024. The Credit Agreement termination date is February 12, 2026. There were no borrowings outstanding under the Credit Agreement as of June 30, 2024.

Current wording

We have an unsecured revolving credit agreement (the "Credit Agreement") with a group of lenders which may be used for working capital and general corporate purposes. The Credit Agreement provides for aggregate revolving loan commitments of $300,000 (the "Facility"). Under the Credit Agreement, we may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. In addition, the Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately $17,100 outstanding as of September 30, 2024. The Credit Agreement termination date is February 12, 2026. There were no borrowings outstanding under the Credit Agreement as of September 30, 2024.