NVR INC

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

Previous wording

During the second quarter of 2025, demand for new homes continued to be negatively impacted by affordability issues, rising resale and new home inventory, declining consumer confidence and economic volatility. We expect that affordability issues, interest rate volatility and economic volatility may continue to weigh on demand and home prices. We also expect to continue to face margin pressure due to affordability issues and cost pressures. 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

During the third quarter of 2025, demand for new homes continued to be negatively impacted by affordability issues, rising resale and new home inventory, declining consumer confidence and economic volatility. We expect that affordability issues, interest rate volatility and economic volatility may continue to weigh on demand and home prices. We also expect to continue to face margin pressure due to affordability issues and cost pressures. 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, 2025, we controlled approximately 171,400 lots as described below.

Current wording

As of September 30, 2025, we controlled approximately 175,300 lots as described below.

Previous wording

We controlled approximately 162,100 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $881,900 and $4,200, respectively. Included in the number of controlled lots are approximately 14,000 lots for which we have recorded a contract land deposit impairment allowance of approximately $76,400 as of June 30, 2025.

Current wording

We controlled approximately 166,050 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $907,600 and $4,000, respectively. Included in the number of controlled lots are approximately 15,000 lots for which we have recorded a contract land deposit impairment allowance of approximately $85,400 as of September 30, 2025.

Previous wording

We had an aggregate investment totaling approximately $65,500 infive JVs, expected to produce approximately 7,300 lots. Of the lots to be produced by the JVs, approximately 6,950 lots were controlled by us and approximately 350 were either under contract with unrelated parties or currently not under contract. We had additional JV funding commitments totaling approximately $13,300 as of June 30, 2025.

Current wording

We had an aggregate investment totaling approximately $66,500 infive JVs, expected to produce approximately 7,300 lots. Of the lots to be produced by the JVs, approximately 6,950 lots were controlled by us and approximately 350 were either under contract with unrelated parties or currently not under contract. We had additional JV funding commitments totaling approximately $11,700 as of September 30, 2025.

Previous wording

We owned land with a carrying value of approximately $39,500 that we intend to develop into approximately 2,350 finished lots.

Current wording

We owned land with a carrying value of approximately $38,000 that we intend to develop into approximately 2,300 finished lots.

Previous wording

In addition, we have certain properties under contract with land owners that are expected to yield approximately 39,600 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, 2025, these properties are controlled with deposits in cash totaling approximately $32,400, of which approximately $9,600 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 47,100 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, 2025, these properties are controlled with deposits in cash totaling approximately $46,100, of which approximately $10,400 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 2025 totaled $2,598,814, a slight decrease from the second quarter of 2024. Net income for the second quarter ended June 30, 2025 was $333,737, or $108.54 per diluted share. For the second quarter ended June 30, 2025, net income decreased 17% and diluted earnings per share decreased 10% when compared to net income and diluted earnings per share for the second quarter of 2024, respectively. Our homebuilding gross profit margin percentage decreased to 21.5% in the second quarter of 2025 from 23.6% in the second quarter of 2024. New orders, net of cancellations (“New Orders”) decreased by 11% in the second quarter of 2025 compared to the second quarter of 2024. The New Order cancellation rate for the second quarter of 2025 increased to 16.5% from 12.9% in the same period in 2024. The average sales price for New Orders remained relatively flat when compared to the same period in the prior year.

Current wording

Our consolidated revenues for the third quarter of 2025 totaled $2,609,505, a 5% decrease from the third quarter of 2024. Net income for the third quarter ended September 30, 2025 was $342,688, or $112.33 per diluted share. For the third quarter ended September 30, 2025, net income decreased 20% and diluted earnings per share decreased 14% when compared to net income and diluted earnings per share for the third quarter of 2024, respectively. Our homebuilding gross profit margin percentage decreased to 21.0% in the third quarter of 2025 from 23.4% in the third quarter of 2024. New orders, net of cancellations (“New Orders”) decreased by 16% in the third quarter of 2025 compared to the third quarter of 2024. The New Order cancellation rate for the third quarter of 2025 increased to 19.4% from 14.5% in the same period in 2024. The average sales price for New Orders in the third quarter of 2025 was $464.8, an increase of 3% compared to the third quarter of 2024.

Previous wording

Selling, general and administrative (“SG&A”) expense in the second quarter of 2025 increased by approximately $8,000 compared to the second quarter of 2024, and increased as a percentage of revenue to 5.9% from 5.5%. The increase in SG&A expense was attributable in part to a $3,500 increase in sales and marketing expenses, due to an increase in model home related expenses and advertising costs, coupled with higher overhead costs associated with increased headcount quarter over quarter.

Current wording

Selling, general and administrative (“SG&A”) expense in the third quarter of 2025 decreased by approximately $7,000, or 5%, compared to the third quarter of 2024, and as a percentage of revenue remained flat at 5.6% quarter over quarter. The decrease in SG&A expense was primarily attributable to a decrease in incentive compensation expense based on current year company performance, offset partially by higher overhead costs associated with increased headcount quarter over quarter.

Previous wording

Homebuilding revenues increased 1% in the first six months of 2025 compared to the same period in 2024, as a result of a 3% increase in the average settlement price, offset partially by a 1% decrease in the number of units settled. The increase in the average settlement price was primarily attributable to a 4% higher average sales price of units in backlog entering 2025 compared to the backlog entering 2024. The decrease in settlements was attributable to a 3% lower backlog unit balance entering 2025 compared to the backlog unit balance entering 2024. Gross profit margin percentage in the first six months of 2025 decreased to 21.7% from 24.0% in the first six months of 2024. Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to continued affordability challenges and a lot deposit impairment charge of approximate $21,300 in the first half of 2025. In the first half of 2024, the Company recorded an approximate $8,800 expense reversal related to previously impaired lot deposits.

Current wording

Homebuilding revenues decreased 1% in the first nine months of 2025 compared to the same period in 2024, as a result of a 2% decrease in the number of units settled. The decrease in settlements was attributable to a 3% lower backlog unit balance entering 2025 compared to the backlog unit balance entering 2024. Gross profit margin percentage in the first nine months of 2025 decreased to 21.5% from 23.8% in the first nine months of 2024. Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to continued affordability challenges and contract land deposit impairments totaling approximately $40,100 in the first nine months of 2025. In the first nine months of 2024, the Company recorded an approximate $4,900 expense reversal related to previously impaired lot deposits.

Previous wording

New Orders and the average sales price of New Orders decreased 11% and 1%, respectively, in the first six months of 2025 compared to the same period in 2024. New Orders were negatively impacted by a 4% decrease in the average number of active communities and an 8% lower sales absorption, due to weakening demand.

Current wording

The number of New Orders decreased 13% in the first nine months of 2025 compared to the same period in 2024. New Orders were negatively impacted by a 13% lower sales absorption, due to weaker demand.

Previous wording

SG&A expense in the first six months of 2025 increased by approximately $20,600 compared to the same period in 2024, and as a percentage of revenue increased to 6.4% in 2025 from 6.1% in 2024. The increase in SG&A expense was primarily attributable to a $9,900 increase in personnel costs attributable to an increase in headcount year over year. Additionally, sales and marketing expenses were approximately $3,700 higher year over year due to an increase in model home related expenses and advertising costs.

Current wording

SG&A expense in the first nine months of 2025 increased by approximately $13,500, or 3%, compared to the same period in 2024, and as a percentage of revenue increased to 6.1% in 2025 from 5.9% in 2024. The increase in SG&A expense was primarily attributable to a $6,000 increase in sales and marketing costs driven by higher model home related expenses and increased advertising expenses.

Previous wording

Our backlog represents homes sold but not yet settled with our customers. As of June 30, 2025, our backlog decreased on a unit and dollar basis by 13% to 10,069 units and $4,753,905, respectively, when compared to 11,597 units and $5,454,470, respectively, as of June 30, 2024. The decrease in the number of backlog units was primarily attributable to an 11% decrease in New Orders year over year, coupled with a 3% lower backlog unit balance entering 2025 compared to the backlog unit balance entering 2024. Backlog dollars were lower primarily due to the decrease in backlog units in 2025.

Current wording

Our backlog represents homes sold but not yet settled with our customers. As of September 30, 2025, our backlog decreased on a unit basis by 19% to 9,165 units and on a dollar basis by 17% to $4,394,695 when compared to 11,339 units and $5,323,366, respectively, as of September 30, 2024. The decrease in the number of backlog units was primarily attributable to a 13% decrease in New Orders year over year, coupled with a 3% lower backlog unit balance entering 2025 compared to the backlog unit balance entering 2024. Backlog dollars were lower primarily due to the decrease in backlog units in 2025.

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. Our cancellation rate was approximately 16% and 13% in the first six months of 2025 and 2024, respectively, calculated as the total of all cancellations during the period as a percentage of gross sales during the same period. During the most recent four quarters, approximately 6% 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 2025 or future years. Other than units that are cancelled, we expect to settle substantially all of our June 30, 2025 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. Our cancellation rate was approximately 17% and 14% in the first nine months of 2025 and 2024, respectively, calculated as the total of all cancellations during the period as a percentage of gross sales during the same period. During the most recent four quarters, approximately 6% 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 2025 or future years. Other than units that are cancelled, we expect to settle substantially all of our September 30, 2025 backlog within the next twelve months.

Previous wording

We record charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. We evaluate our entire net contract land deposit portfolio for impairment each quarter. For presentation purposes below, the contract land deposit reserve as of June 30, 2025 and December 31, 2024 has been allocated to the respective year’s reportable segments to show contract land deposits on a net basis. The net contract land deposit balances below also include approximately $4,200 and $8,700 as of June 30, 2025 and December 31, 2024, respectively, of letters of credit issued as deposits in lieu of cash.

Current wording

We record charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. We evaluate our entire net contract land deposit portfolio for impairment each quarter. For presentation purposes below, the contract land deposit reserve as of September 30, 2025 and December 31, 2024 has been allocated to the respective year’s reportable segments to show contract land deposits on a net basis. The net contract land deposit balances below also include approximately $4,000 and $8,700 as of September 30, 2025 and December 31, 2024, respectively, of letters of credit issued as deposits in lieu of cash.

Previous wording

The following tables summarize certain homebuilding operating activity by reportable segment for the three and six months ended June 30, 2025 and 2024.

Current wording

The following tables summarize certain homebuilding operating activity by reportable segment for the three and nine months ended September 30, 2025 and 2024.

Previous wording

The Mid Atlantic segment had an approximate $20,900, or 5%, decrease in segment profit in the first six months of 2025 compared to the first six months of 2024. This decrease was due primarily to a decrease in gross profit margins to 23.8% in the first six months of 2025 from 25.2% in the first six months of 2024, offset partially by a 3% increase in segment revenues. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due primarily to continued affordability challenges. Segment revenues increased due to a 3% higher average settlement price in 2025 compared to 2024 attributable primarily to a 4% higher average sales price of units in backlog entering 2025 compared to backlog entering 2024.

Current wording

The Mid Atlantic segment had an approximate $46,000, or 21%, decrease in segment profit in the third quarter of 2025 compared to the third quarter of 2024. This decrease was due primarily to a 9% decrease in segment revenues, coupled with a decrease in gross profit margins to 23.4% in the third quarter of 2025 from 25.1% in the same period of 2024. Segment revenues decreased due to a 10% decrease in the number of units settled in the third quarter of 2025 when compared to the third quarter of 2024. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due primarily to continued affordability challenges.

Previous wording

Segment New Orders decreased 15% while the average sales price of New Orders increased 5% in the second quarter of 2025 compared to the second quarter of 2024. New Orders were negatively impacted by a 7% decrease in the number of active communities and a 9% lower sales absorption rate. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Current wording

Segment New Orders decreased 22% while the average sales price of New Orders increased 3%, in the third quarter of 2025 compared to the third quarter of 2024. New Orders were lower primarily due to a 14% decrease in the average number of active communities, coupled with a 9% lower sales absorption rate. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Previous wording

The Mid Atlantic segment had an approximate $17,800, or 9%, decrease in segment profit in the second quarter of 2025 compared to the second quarter of 2024. This decrease was due primarily to a decrease in gross profit margins to 23.5% in the second quarter of 2025 from 24.8% in the same period of 2024. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due primarily to continued affordability challenges.

Current wording

The Mid Atlantic segment had an approximate $66,900, or 11%, decrease in segment profit in the first nine months of 2025 compared to the first nine months of 2024. This decrease was due primarily to a decrease in gross profit margins to 23.7% in the first nine months of 2025 from 25.2% in the first nine months of 2024, coupled with an approximate $48,000, or 1% decrease in segment revenues. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due primarily to continued affordability challenges.

Previous wording

New Orders decreased 11% while the average sales price remained relatively flat in the second quarter of 2025 compared to the second quarter of 2024. New Orders were negatively impacted by a 2% decrease in the average number of active communities and a 10% lower sales absorption rate, due to weakening demand.

Current wording

Segment New Orders decreased 19% while the average sales price of New Orders remained relatively flat, in the first nine months of 2025 compared to the first nine months of 2024. New Orders were lower primarily due to a 20% decrease in the average number of active communities year over year.

Previous wording

The North East segment had an approximate $3,600, or 7%, increase in segment profit in the second quarter of 2025 compared to the second quarter of 2024, due primarily to an increase in segment revenues of approximately $21,600, or 8%. Segment revenues increased due to an 11% increase in the average settlement price quarter over quarter, offset partially by a 3% decrease in the number of units settled. The increase in the average settlement price is attributable primarily to an 11% higher average price of units in backlog entering the second quarter of 2025 compared to backlog entering the second quarter of 2024. The decrease in settlements is attributable to a 12% lower backlog unit balance entering the second quarter of 2025 compared to the backlog unit balance entering the second quarter of 2024, offset partially by a higher backlog turnover rate quarter over quarter. The segment's gross profit margin percentage remained relatively flat quarter over quarter.

Current wording

The North East segment had an approximate $4,300, or 8%, decrease in segment profit in the third quarter of 2025 compared to the third quarter of 2024, due primarily to a decrease in segment revenues of approximately $8,700, or 3%. Segment revenues decreased due to a 15% decrease in the number of units settled, offset by a 14% increase in the average settlement price quarter over quarter. The decrease in the number of settlements is attributable to a 16% lower backlog unit balance entering the third quarter of 2025 compared to the backlog unit balance entering the third quarter of 2024. The increase in the average settlement price is attributable primarily to a 9% higher average price of units in backlog entering the third quarter of 2025 compared to backlog entering the third quarter of 2024. The segment's gross profit margin percentage remained relatively flat quarter over quarter.

Previous wording

Segment New Orders decreased 11% while the average sales price of New Orders increased 5%, in the second quarter of 2025 compared to the second quarter of 2024. New Orders were lower primarily due to a 16% decrease in the average number of active communities, offset partially by a 6% higher sales absorption rate. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Current wording

Segment New Orders decreased 19% while the average sales price of New Orders increased 5%, in the third quarter of 2025 compared to the third quarter of 2024. New Orders were lower primarily due to a 23% lower sales absorption rate, offset partially by a 5% increase in the average number of active communities. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Previous wording

The North East segment had an approximate $11,800, or 12%, increase in segment profit in the first six months of 2025 compared to the first six months of 2024, due primarily to an increase in segment revenue of approximately $54,800, or 10%. Segment revenues were favorably impacted by an 11% increase in the average settlement price 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 2025 compared to backlog entering 2024. The segment's gross profit margin percentage remained relatively flat year over year.

Current wording

The North East segment had an approximate $7,600, or 5%, increase in segment profit in the first nine months of 2025 compared to the first nine months of 2024, due primarily to an increase in segment revenue of approximately $46,100, or 5%. Segment revenues were favorably impacted by a 12% increase in the average settlement price year over year, offset by a 6% decrease in the number of units settled. The increase in the average settlement price was primarily attributable to a 9% higher average sales price of units in backlog entering 2025 compared to backlog entering 2024, coupled with a 13% increase in in the average sales price of New Orders in the first quarter of 2025 compared to the same period in 2024. The decrease in the number of units settled was driven by the 28% decrease in the number of New Orders in the first quarter of 2025 compared to the same period in 2024. The segment's gross profit margin percentage remained relatively flat year over year.

Previous wording

Segment New Orders decreased 20% while the average sales price of New Orders increased 9%, in the first six months of 2025 compared to the first six months of 2024. New Orders were lower primarily due to a 24% decrease in the average number of communities, offset partially by a 4% higher sales absorption rate year over year. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Current wording

Segment New Orders decreased 20% while the average sales price of New Orders increased 8% in the first nine months of 2025 compared to the first nine months of 2024. New Orders were lower primarily due to a 14% decrease in the average number of active communities, coupled with a 7% lower sales absorption rate year over year due to weaker demand. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Previous wording

The Mid East segment had an approximate $1,900, or 3%, decrease in segment profit in the second quarter of 2025 compared to the second quarter of 2024, due primarily to a decrease in gross profit margins, which offset an increase in segment revenues of approximately $16,000, or 4%. The segment's gross profit margin percentage decreased to 21.0% in the second quarter of 2025 from 21.8% in the second quarter of 2024. Gross profit margin was negatively impacted by higher lot and certain operating costs, as well as, by pricing pressure due primarily to continued affordability challenges. The segment's revenues were higher primarily due to a 3% higher average settlement price quarter over quarter as settlements shifted to higher priced markets.

Current wording

The Mid East segment had an approximate $5,000, or 6%, decrease in segment profit in the third quarter of 2025 compared to the third quarter of 2024, due primarily to a decrease in gross profit margins, which offset an increase in segment revenues of approximately $7,600, or 2%. The segment's gross profit margin percentage decreased to 21.7% in the third quarter of 2025 from 22.8% in the third quarter of 2024. Gross profit margin was negatively impacted by higher lot and certain operating costs, as well as by pricing pressure due primarily to continued affordability challenges.

Previous wording

The Mid East segment had an approximate $14,700, or 11%, decrease in segment profit in the first six months of 2025 compared to the first six months of 2024, due primarily to a decrease in gross profit margins to 20.7% in the first six months of 2025 from 22.2% in the first six months of 2024. Gross profit margin was negatively impacted by higher lot and certain operating costs, as well as, by pricing pressure due primarily to continued affordability challenges.

Current wording

The Mid East segment had an approximate $19,600, or 9%, decrease in segment profit in the first nine months of 2025 compared to the first nine months of 2024, due primarily to a decrease in gross profit margins to 21.1% in the first nine months of 2025 from 22.4% in the first nine months of 2024. Gross profit margin was negatively impacted by higher lot and certain operating costs, as well as by pricing pressure due primarily to continued affordability challenges.

Previous wording

Segment New Orders decreased 14% while the average sales price of New Orders increased 4% in the first six months of 2025 compared to the first six months of 2024. New Orders were negatively impacted by a 6% decrease in the number of active communities and an 8% lower sales absorption rate year over year. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment year over year.

Current wording

Segment New Orders decreased 15% while the average sales price of New Orders increased 5% in the first nine months of 2025 compared to the first nine months of 2024. New Orders were negatively impacted by an 11% lower sales absorption rate due to weaker demand and a 4% decrease in the average number of active communities year over year. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment year over year.

Previous wording

The South East segment had an approximate $42,900, or 45%, decrease in segment profit in the second quarter of 2025 compared to the second quarter of 2024. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage, a decrease in segment revenues and an increase in SG&A expenses. The segment's gross profit margin percentage decreased to 18.7% in the second quarter of 2025 from 22.2% in the second quarter of 2024. Gross profit margins were negatively impacted by higher lot costs, an increase in certain operating costs, and by pricing pressure attributable to continued affordability challenges. Additionally, gross profit margins in the second quarter of 2025 were impacted by $2,400 in higher lot deposit impairment charges when compared to the second quarter of 2024. Segment revenues decreased by approximately $32,400, or 5%, quarter over quarter due primarily to a 4% decrease in the number of units settled. The decrease in settlements is attributable to a 9% lower backlog unit balance entering the second quarter of 2025 compared to the backlog unit balance entering the second quarter of 2024, offset partially by a higher backlog turnover rate quarter over quarter, SG&A expenses were 19% higher quarter over quarter, resulting primarily from higher personnel and marketing costs attributable to a 25% increase in the average number of active communities quarter over quarter.

Current wording

The South East segment had an approximate $38,200, or 40%, decrease in segment profit in the third quarter of 2025 compared to the third quarter of 2024. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage, a decrease in segment revenues and an increase in SG&A expenses. The segment's gross profit margin percentage decreased to 18.0% in the third quarter of 2025 from 21.9% in the third quarter of 2024. Gross profit margins were negatively impacted by higher lot costs, an increase in certain operating costs, and pricing pressure attributable to continued affordability challenges. Additionally, gross profit margins in the third quarter of 2025 were impacted by a $9,000 increase in contract land deposit impairment charges when compared to the third quarter of 2024. SG&A expenses were 10% higher quarter over quarter, resulting primarily from higher personnel and marketing costs attributable to a 31% increase in the average number of active communities quarter over quarter.

Previous wording

Segment New Orders and the average sales price of New Orders decreased 4% and 1%, respectively, in the second quarter of 2025 compared to the second quarter of 2024. New Orders were negatively impacted by a 23% lower absorption rate, offset partially by the aforementioned increase in the average number of active communities within the segment quarter over quarter. Both the absorption rate and the average sales price of New Orders have been negatively impacted by rising resale and new home inventory in several of the markets within the segment.

Current wording

Segment New Orders decreased 8% while the average sales price of New Orders increased 4% in the third quarter of 2025 compared to the third quarter of 2024. New Orders were negatively impacted by a 30% lower absorption rate, offset partially by the aforementioned increase in the average number of active communities within the segment quarter over quarter. Absorption rates continue to be negatively impacted by rising resale and new home inventory in several of the markets within the segment. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Previous wording

The South East segment had an approximate $88,600, or 48%, decrease in segment profit in the first six months of 2025 compared to the first six months of 2024. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage, a decrease in segment revenues and an increase in SG&A expenses. The segment's gross profit margin percentage decreased to 19.2% in the first six months of 2024 from 23.3% in the first six months of 2024. Gross profit margins were negatively impacted by higher lot costs, an increase in certain operating costs, and by pricing pressure attributable to continued affordability challenges. Segment revenues decreased by approximately $61,500, or 5%, due to a 3% decrease in the number of units settled, coupled with a 2% decrease in the average settlement price. The decrease in settlements is attributable to an 11% lower backlog unit balance entering 2025 compared to the backlog entering 2024, offset partially by a higher backlog turnover rate year over year. The decrease in the average settlement price is primarily attributable to a 1% lower average sales price of homes in backlog entering 2025 compared to backlog entering 2024. SG&A expenses were 20% higher year over year, resulting primarily from higher personnel and marketing costs attributable to a 23% increase in the average number of active communities quarter over quarter.

Current wording

The South East segment had an approximate $126,800, or 45%, decrease in segment profit in the first nine months of 2025 compared to the first nine months of 2024. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage, a decrease in segment revenues and an increase in SG&A expenses. The segment's gross profit margin percentage decreased to 18.7% in the first nine months of 2025 from 22.8% in the first nine months of 2024. Gross profit margins were negatively impacted by higher lot costs, an increase in certain operating costs, and by pricing pressure attributable to continued affordability challenges. Segment revenues decreased by approximately $69,800, or 3%, due to a 3% decrease in the average settlement price. The decrease in the average settlement price is primarily attributable to a 4% decrease in the average sales price of New Orders in the first quarter of 2025 compared to the same period in 2024. SG&A expenses were 17% higher year over year, resulting primarily from higher personnel and marketing costs attributable to a 26% increase in the average number of active communities quarter over quarter.

Previous wording

Segment New Orders and the average sales price of New Orders decreased 1% and 3%, respectively, in the first six months of 2025 compared to the first six months of 2024. New Orders were negatively impacted by a 20% lower absorption rate, offset partially by the aforementioned increase in the average number of active communities within the segment year over year. Both the absorption rate and the average sales price of New Orders have been negatively impacted by rising resale and new home inventory in several of the markets within the segment.

Current wording

Segment New Orders decreased 3% while the average sales price of New Orders remained flat during the first nine months of 2025 compared to the first nine months of 2024. New Orders were negatively impacted by a 23% lower absorption rate due to weaker demand, offset partially by the aforementioned increase in the average number of active communities within the segment year over year. Absorption rates continue to be negatively impacted by rising resale and new home inventory in several of the markets within the segment.

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, 2025 and 2024:

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, 2025 and 2024:

Previous wording

Loan closing volume for the three and six months ended June 30, 2025 increased by approximately $25,200, or 2%, and $80,100, or 3%, respectively, from the same periods in 2024. The increase in loan closing volume during the three and six months ended June 30, 2025 was primarily attributable to higher average loan amounts in the respective periods.

Current wording

Loan closing volume for the three and nine months ended September 30, 2025 decreased by approximately $116,700, or 7%, and $36,600, or 1%, respectively, from the same periods in 2024. The decrease in loan closing volume during the three and nine months ended September 30, 2025 was primarily attributable to a lower number of loans closed in the respective periods resulting from fewer homebuilder settlements.

Previous wording

Segment profit for the six months ended June 30, 2025 decreased by approximately $11,400, or 15%, from the same period in 2024. This decrease was primarily attributable to a decrease of approximately $8,700, or 8%, in mortgage banking fees due to a decrease in gains on sales of loans.

Current wording

Segment profit for the three months ended September 30, 2025 decreased by approximately $3,000, or 8%, from the same period in 2024. This decrease was primarily due to a reduction of approximately $6,100, or 11%, in mortgage banking fees, driven by lower gains on loan sales. This was partially offset by a $3,200 decline in SG&A expenses compared to the same period in the prior year.

Previous wording

Segment profit for the three months ended June 30, 2025 decreased by approximately $15,400, or 33%, from the same period in 2024. This decrease was primarily attributable to a decrease of approximately $14,000, or 22%, in mortgage banking fees due to a decrease in gains on sales of loans.

Current wording

Segment profit for the nine months ended September 30, 2025 decreased by approximately $14,300, or 13%, from the same period in 2024. This decrease was primarily attributable to a decrease of approximately $14,900, or 9%, in mortgage banking fees due to a decrease in gains on sales of loans.

Previous wording

Our effective tax rate for the three and six month periods ended June 30, 2025 was 25.4%, in each respective period, compared to 24.9% and 20.8% for the three and six months ended June 30, 2024, respectively. The increase in the effective tax rate in the three and six month periods ended June 30, 2025 compared to the same periods in 2024 was primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $3,500 and $6,200 for the three and six months ended June 30, 2025, respectively, and approximately $6,800 and $50,600 for the three and six months ended June 30, 2024, respectively.

Current wording

Our effective tax rate for the three and nine month periods ended September 30, 2025 was 22.8% and 24.5%, respectively, compared to 20.3% and 20.6% for the three and nine months ended September 30, 2024, respectively. The increase in the effective tax rate in the three and nine month periods ended September 30, 2025 compared to the same periods in 2024 was primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $13,400 and $19,700 for the three and nine months ended September 30, 2025, respectively, and approximately $23,100 and $73,700 for the three and nine months ended September 30, 2024, 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, 2025, we had approximately $1,800,000 in cash and cash equivalents, approximately $289,700 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, 2025, we had approximately $2,000,000 in cash and cash equivalents, approximately $289,800 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 $598,900 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 $640,900 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 2025. For the six months ended June 30, 2025, we repurchased 142,954 shares of our common stock at an aggregate purchase price of $1,054,807. As of June 30, 2025, we had approximately $563,400 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 2025. For the nine months ended September 30, 2025, we repurchased 178,178 shares of our common stock at an aggregate purchase price of $1,331,212. As of September 30, 2025, we had approximately $1,036,980 available under Board approved repurchase authorizations.

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 $10,300 outstanding as of June 30, 2025. The Credit Agreement termination date is March 11, 2030. There were no borrowings outstanding under the Credit Agreement as of June 30, 2025.

Current wording

We have an unsecured revolving credit agreement (the "Credit Agreement") which provides for aggregate revolving loan commitments of $300,000, and a $100,000 sublimit for the issuance of letters of credit of which there was approximately $10,200 outstanding as of September 30, 2025. There were no borrowings outstanding under the Credit Agreement as of September 30, 2025.