NVR INC

Previous wording

Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Current wording

Results of Operations for the Three and Nine Months Ended September 30, 2026 and 2025

Previous wording

During the second quarter of 2026, demand for new homes continued to be negatively impacted by affordability issues, high home inventory levels in certain markets, weak consumer sentiment and economic volatility. We expect that these issues may continue to weigh on demand and home prices. We also expect further margin pressure from higher land prices and from repositioning of communities as the housing market continues to adjust. 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 2026, demand for new homes weakened further. Demand continued to be negatively impacted by affordability issues, rising mortgage interest rates, increasing home inventory levels in certain markets, weak consumer sentiment and economic volatility. We expect that these issues may continue to weigh on demand and home prices. In addition, homebuilding operations have been negatively impacted by labor capacity issues, elevated cancellation rates and mortgage qualification challenges. We also expect further margin pressure from higher land prices and from repositioning of communities as the housing market continues to adjust to current conditions. 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, 2026, we controlled approximately 184,400 lots as described below.

Current wording

As of September 30, 2026, we controlled approximately 185,300 lots as described below.

Previous wording

We controlled approximately 174,900 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $1,012,300 and $7,200, respectively. Included in the number of controlled lots are approximately 20,950 lots for which we have recorded a contract land deposit impairment allowance of approximately $134,950 as of June 30, 2026.

Current wording

We controlled approximately 176,000 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $1,026,400 and $9,900, respectively. Included in the number of controlled lots are approximately 24,000 lots for which we have recorded a contract land deposit impairment allowance of approximately $156,400 as of September 30, 2026.

Previous wording

We had an aggregate investment totaling approximately $73,300 in four JVs, expected to produce approximately 8,000 lots. We had additional JV funding commitments totaling approximately $23,400 as of June 30, 2026.

Current wording

We had an aggregate investment totaling approximately $80,200 in four JVs, expected to produce approximately 7,850 lots. We had additional JV funding commitments totaling approximately $19,500 as of September 30, 2026.

Previous wording

We owned land with a carrying value of approximately $21,100 that we intend to develop into approximately 1,500 finished lots.

Current wording

We owned land with a carrying value of approximately $21,800, expected to produce approximately 1,450 finished lots.

Previous wording

In addition, we have certain properties under contract with land owners that are expected to yield approximately 38,600 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, 2026, these properties are controlled with deposits in cash totaling approximately $50,000, of which approximately $12,800 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 38,700 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, 2026, these properties are controlled with deposits in cash totaling approximately $46,700, of which approximately $13,000 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 2026 totaled $2,326,356, a decrease of 10% from the second quarter of 2025. Net income for the second quarter ended June 30, 2026 was $236,458, or $83.96 per diluted share. For the second quarter ended June 30, 2026, net income decreased 29% and diluted earnings per share decreased 23% when compared to net income and diluted earnings per share for the second quarter of 2025, respectively. Our homebuilding gross profit margin percentage decreased to 19.2% in the second quarter of 2026 from 21.5% in the second quarter of 2025. New orders, net of cancellations (“New Orders”) increased by 9% in the second quarter of 2026 compared to the second quarter of 2025. The New Order cancellation rate for the second quarter of 2026 decreased to 14.9% from 16.5% in the same period in 2025. The average sales price for New Orders in the second quarter of 2026 was $437.1, a decrease of 5% compared to the same period in the prior year.

Current wording

Our consolidated revenues for the third quarter of 2026 totaled $2,402,430, a decrease of 8% from the third quarter of 2025. Net income for the third quarter ended September 30, 2026 was $248,605, or $89.45 per diluted share. For the third quarter ended September 30, 2026, net income decreased 27% and diluted earnings per share decreased 20% when compared to net income and diluted earnings per share for the third quarter of 2025, respectively. Our homebuilding gross profit margin percentage decreased to 18.3% in the third quarter of 2026 from 21.1% in the third quarter of 2025. New orders, net of cancellations (“New Orders”) decreased by 7% in the third quarter of 2026 compared to the third quarter of 2025. The New Order cancellation rate for the third quarter of 2026 increased to 21.0% from 19.4% in the same period in 2025. The average sales price for New Orders in the third quarter of 2026 was $442.1, a decrease of 5% compared to the same period in the prior year.

Previous wording

Homebuilding revenues decreased 11% in the second quarter of 2026 compared to the same period in 2025, as a result of a 8% decrease in units settled, coupled with a 3% decrease in average price of units settled. The decrease in units settled was primarily attributable to a lower backlog turnover rate quarter over quarter. Gross profit margin percentage in the second quarter of 2026 decreased to 19.2% from 21.5% in the second quarter of 2025. Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to continued affordability challenges and weak consumer sentiment. In addition, margins were impacted by contract land deposit impairments totaling approximately $21,700, compared to $13,200 in the second quarter of 2025.

Current wording

Homebuilding revenues decreased 8% in the third quarter of 2026 compared to the same period in 2025, as a result of a 7% decrease in units settled, coupled with a 2% decrease in average price of units settled. The decrease in units settled was primarily attributable to a lower backlog turnover rate quarter over quarter, due in part to the aforementioned operational challenges. Gross profit margin percentage in the third quarter of 2026 decreased to 18.3% from 21.1% in the third quarter of 2025. Gross profit margin was negatively impacted primarily by higher lot and certain construction costs. In addition, margins were impacted by contract land deposit impairments totaling approximately $24,800, compared to $18,900 in the third quarter of 2025.

Previous wording

New Orders increased 9% while the average sales price decreased 5% in the second quarter of 2026 compared to the second quarter of 2025. New Orders were favorably impacted by a 4% increase in the average number of active communities quarter over quarter, coupled with a 5% higher sales absorption rate in the second quarter of 2026. The decrease in the average sales price of New Orders is attributable to pricing pressure and a relative product mix shift in New Orders from single family detached homes to single family attached homes, which generally sell at lower prices.

Current wording

New Orders and the average sales price of New Orders decreased 7% and 5%, respectively, in the third quarter of 2026 compared to the third quarter of 2025. New Orders were negatively impacted by an 8% lower sales absorption rate in the third quarter of 2026, attributable to the aforementioned weaker demand. The decrease in the average sales price of New Orders is attributable to pricing pressure and a relative product mix shift in New Orders from single family detached homes to single family attached homes, which generally sell at lower prices.

Previous wording

Selling, general and administrative (“SG&A”) expense in the second quarter of 2026 was relatively flat, but increased as a percentage of revenue to 6.6% from 5.9%. The increase in SG&A expense as a percentage of revenue was primarily attributable to a decrease in revenues quarter over quarter.

Current wording

Selling, general and administrative (“SG&A”) expense in the third quarter of 2026 decreased by approximately $7,700, or 5%, but as a percentage of revenue remained relatively flat when compared to the third quarter of 2025. The decrease in SG&A expense was primarily attributable to a decrease of approximately $6,800 in personnel costs attributable to lower headcount quarter over quarter.

Previous wording

Homebuilding revenues decreased 16% in the first six months of 2026 compared to the same period in 2025, as a result of a 14% decrease in units settled, coupled with a 2% decrease in the average settlement price year over year. The decrease in settlements was attributable to a 15% lower backlog unit balance entering 2026 compared to the backlog unit balance entering 2025. Gross profit margin percentage in the first six months of 2026 decreased to 19.4% from 21.7% in the first six months of 2025. Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to continued affordability challenges and weak consumer sentiment. In addition, margins were impacted by contract land deposit impairments totaling approximately $30,600 in the six months ended June 30, 2026, compared to $21,300 in the first six months of 2025.

Current wording

Homebuilding revenues decreased 13% in the first nine months of 2026 compared to the same period in 2025, as a result of a 12% decrease in units settled, coupled with a 2% decrease in the average settlement price year over year. The decrease in settlements was attributable to a 15% lower backlog unit balance entering 2026 compared to 2025 and lower backlog turnover due in part to the aforementioned operational challenges. Gross profit margin percentage in the first nine months of 2026 decreased to 19.0% from 21.5% in the first nine months of 2025. Gross profit margin was negatively impacted primarily by higher lot and certain construction costs. In addition, margins were impacted by contract land deposit impairments totaling approximately $55,400 in the nine months ended September 30, 2026, compared to $40,100 in the first nine months of 2025.

Previous wording

New Orders increased 8% while the average sales price of New Orders decreased 3% in the first six months of 2026 compared to the same period in 2025. New Orders were favorably impacted by a 6% increase in the average number of active communities, coupled with a 3% higher sales absorption rate year over year. The decrease in the average sales price of New Orders is attributable to pricing pressure and a relative product mix shift in New Orders from single family detached homes to single family attached homes, which generally sell at lower prices.

Current wording

New Orders increased 4% while the average sales price of New Orders decreased 4% in the first nine months of 2026 compared to the same period in 2025. New Orders were favorably impacted by a 4% increase in the average number of active communities. The decrease in the average sales price of New Orders is attributable to pricing pressure and a relative product mix shift in New Orders from single family detached homes to single family attached homes, which generally sell at lower prices.

Previous wording

SG&A expense in the first six months of 2026 decreased by approximately $6,600 compared to the same period in 2025, but increased as a percentage of revenue to 7.5% in 2026 from 6.4% in 2025. The decrease in SG&A expense was primarily attributable to a decrease of approximately $3,500 in personnel costs due primarily to lower headcount and a decrease of approximately $3,100 in equity based compensation expense year over year.

Current wording

SG&A expense in the first nine months of 2026 decreased by approximately $14,300 compared to the same period in 2025, but increased as a percentage of revenue to 6.8% in 2026 from 6.1% in 2025. The decrease in SG&A expense was primarily attributable to a decrease of approximately $10,200 in personnel costs due primarily to lower headcount year over year.

Previous wording

Our backlog represents homes sold but not yet settled with our customers. As of June 30, 2026, our backlog increased on a unit basis by 9% to 10,998 units and on a dollar basis by 5% to $4,992,229, when compared to 10,069 units and $4,753,905, respectively, as of June 30, 2025. The increase in the number of backlog units was primarily attributable to an 8% increase in New Orders year over year. Backlog dollars were higher primarily due to the increase in backlog units in 2026, offset partially by a 4% decrease in the average price of backlog units year over year.

Current wording

Our backlog represents homes sold but not yet settled with our customers. As of September 30, 2026, our backlog increased on a unit basis by 10% to 10,121 units and on a dollar basis by 4% to $4,585,259, when compared to 9,165 units and $4,394,695, respectively, as of September 30, 2025. The increase in the number of backlog units was primarily attributable to a 4% increase in New Orders year over year, coupled with a lower backlog turnover rate year over year, as discussed above. Backlog dollars were higher primarily due to the increase in backlog units in 2026, offset partially by a 6% decrease in the average price of 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. Our cancellation rate was approximately 14% and 16% in the first six months of 2026 and 2025, 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 2026 or future years. Other than units that are cancelled, we expect to settle substantially all of our June 30, 2026 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 16% and 17% in the first nine months of 2026 and 2025, 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 2026 or future years. Other than units that are cancelled, we expect to settle substantially all of our September 30, 2026 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, 2026 and December 31, 2025 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 $7,200 and $4,600 as of June 30, 2026 and December 31, 2025, 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, 2026 and December 31, 2025 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 $9,900 and $4,600 as of September 30, 2026 and December 31, 2025, 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, 2026 and 2025.

Current wording

The following tables summarize certain homebuilding operating activity by reportable segment for the three and nine months ended September 30, 2026 and 2025.

Previous wording

The Mid Atlantic segment had an approximate $85,800, or 45%, decrease in segment profit in the second quarter of 2026 compared to the second quarter of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $249,300, or 22%, coupled with a decrease in gross profit margin to 20.9% in the second quarter of 2026 from 23.5% in the same period of 2025. Segment revenues decreased due to an 18% decrease in units settled, coupled with a 5% lower average settlement price quarter over quarter. The decrease in settlements was primarily attributable to a 6% lower backlog unit balance entering the second quarter of 2026 compared to backlog entering the second quarter of 2025, coupled with a lower backlog turnover rate. The decrease in the average settlement price was primarily attributable to a 4% lower average price of units in backlog entering the second quarter of 2026 compared to the backlog entering the second quarter of 2025. Gross profit margins were negatively impacted by higher lot costs and by pricing pressure due to affordability challenges.

Current wording

The Mid Atlantic segment had an approximate $64,500, or 38%, decrease in segment profit in the third quarter of 2026 compared to the third quarter of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $144,500, or 14%, coupled with a decrease in gross profit margin to 20.9% in the third quarter of 2026 from 23.4% in the same period of 2025. Segment revenues decreased due to an 11% decrease in units settled, coupled with a 3% lower average settlement price quarter over quarter. The decrease in settlements was primarily attributable to a lower backlog turnover rate quarter over quarter, resulting in part from the aforementioned operational challenges in markets within the segment. The decrease in the average settlement price was primarily attributable to a 4% lower average price of units in backlog entering the third quarter of 2026 compared to the backlog entering the third quarter of 2025. Gross profit margins were negatively impacted by higher lot and certain construction costs, quarter over quarter.

Previous wording

The Mid Atlantic segment had an approximate $181,400, or 48%, decrease in segment profit in the first six months of 2026 compared to the first six months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $593,600, or 27%, coupled with a decrease in gross profit margin to 21.5% in the first six months of 2026 from 23.8% in the first six months of 2025. Segment revenues decreased due to a 24% decrease in units settled, coupled with a 3% lower average settlement price in the first six months of 2026 compared to the same period in 2025. The decrease in settlements was primarily attributable to a 22% lower backlog unit balance entering 2026 compared to the backlog entering 2025. The decrease in the average settlement price was primarily attributable to a 3% lower average price of units in backlog entering 2026 compared to the backlog entering 2025. Gross profit margins were negatively impacted by higher lot costs and by pricing pressure due to affordability challenges.

Current wording

The Mid Atlantic segment had an approximate $245,800, or 45%, decrease in segment profit in the first nine months of 2026 compared to the first nine months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $738,000, or 23%, coupled with a decrease in gross profit margin to 21.3% in the first nine months of 2026 from 23.7% in the first nine months of 2025. Segment revenues decreased due to a 20% decrease in units settled, coupled with a 3% lower average settlement price in the first nine months of 2026 compared to the same period in 2025. The decrease in settlements was primarily attributable to a 22% lower backlog unit balance entering 2026 compared to the backlog entering 2025, coupled with a lower backlog turnover rate in 2026. The decrease in the average settlement price was primarily attributable to a 3% lower average price of units in backlog entering 2026 compared to the backlog entering 2025. Gross profit margins were negatively impacted by higher lot and certain construction costs.

Previous wording

Segment New Orders increased 5%, while the average sales price of New Orders decreased 5%, in the first six months of 2026 compared to the first six months of 2025. New Orders were higher primarily due to a 7% increase in the average number of active communities, offset partially by a 2% lower sales absorption rate year over year. The average sales price of New Orders was negatively impacted by a shift to lower priced communities in certain markets within the segment.

Current wording

Segment New Orders increased 2%, while the average sales price of New Orders decreased 5%, in the first nine months of 2026 compared to the first nine months of 2025. New Orders were higher primarily due to an 11% increase in the average number of active communities, offset by an 8% lower sales absorption rate year over year resulting from the aforementioned weaker demand. The average sales price of New Orders was negatively impacted by a shift to lower priced communities in certain markets within the segment.

Previous wording

Segment New Orders and the average sales price of New Orders decreased 8% and 2%, respectively, in the second quarter of 2026 compared to the second quarter of 2025. New Orders were lower primarily due to a 16% lower sales absorption rate, offset by a 9% increase in the average number of active communities. The decrease in sales absorption was attributable to weak consumer sentiment.

Current wording

Segment New Orders decreased 46% while the average sales price of New Orders increased 13%, in the third quarter of 2026 compared to the third quarter of 2025. New Orders were lower primarily due to a 22% decrease in the average number of active communities quarter over quarter, coupled with a 31% lower sales absorption rate. The decrease in sales absorption was attributable to the aforementioned weaker demand, coupled with a higher cancellation rate quarter over quarter. The increase in the average sales price of New Orders was attributable to a shift to higher priced communities in certain markets within the segment.

Previous wording

The North East segment had an approximate $19,000, or 33%, decrease in segment profit in the second quarter of 2026 compared to the second quarter of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $28,100, or 9%, coupled with a decrease in gross profit margin to 22.0% in the second quarter of 2026 from 26.2% in the second quarter of 2025. Segment revenues decreased due to a 5% decrease in units settled, coupled with a 5% lower average settlement price quarter over quarter. The decrease in settlements was primarily attributable to a lower backlog turnover rate quarter over quarter. The decrease in the average settlement price was primarily attributable to a 10% lower average price of units in backlog entering the second quarter of 2026 compared to the backlog entering the second quarter of 2025. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due to affordability challenges.

Current wording

The North East segment had an approximate $55,700, or 34%, decrease in segment profit in the first nine months of 2026 compared to the first nine months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $80,200, or 9%, coupled with a decrease in gross profit margin to 21.8% in the first nine months of 2026 from 26.3% in the first nine months of 2025. Segment revenues decreased primarily due to a 5% decrease in units settled, coupled with a 4% lower average settlement price year over year. The decrease in settlements was attributable to both an 8% lower backlog unit balance entering 2026 compared to the backlog entering 2025 and a lower backlog turnover rate year over year. The decrease in the average settlement price was primarily attributable to a 7% lower average price of New Orders in the first six months of 2026 compared to the first six months of 2025. Gross profit margins were negatively impacted by higher lot costs.

Previous wording

The Mid East segment had an approximate $21,800, or 19%, decrease in segment profit in the first six months of 2026 compared to the first six months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $98,500, or 11%. Segment revenues decreased due to a 15% decrease in units settled, offset partially by a 4% higher average settlement price. The decrease in settlements was primarily attributable to a 20% lower backlog unit balance entering 2026 compared to the backlog entering 2025. The increase in the average settlement price was attributable to a 5% higher average price of units in backlog entering 2026 compared to backlog entering 2025.

Current wording

The Mid East segment had an approximate $38,200, or 20%, decrease in segment profit in the first nine months of 2026 compared to the first nine months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $135,900, or 10%, coupled with a decrease in gross profit margin to 20.2% in the first nine months of 2026 from 21.1% in the first nine months of 2025. Segment revenues decreased due to a 13% decrease in units settled, offset partially by a 4% higher average settlement price. The decrease in settlements was primarily attributable to a 20% lower backlog unit balance entering 2026 compared to the backlog entering 2025, coupled with a lower backlog turnover rate year over year. The increase in the average settlement price was attributable to a 5% higher average price of units in backlog entering 2026 compared to backlog entering 2025. Gross profit margins were negatively impacted primarily by higher lot costs year over year.

Previous wording

Segment New Orders increased 9% while the average sales price of New Orders remained flat in the first six months of 2026 compared to the first six months of 2025. New Orders were favorably impacted by a 6% higher sales absorption rate, coupled with a 3% increase in the number of active communities year over year.

Current wording

Segment New Orders increased 5% while the average sales price of New Orders remained relatively flat in the first nine months of 2026 compared to the first nine months of 2025. New Orders were favorably impacted by a 4% higher sales absorption rate.

Previous wording

The South East segment had an approximate $3,400, or 7%, decrease in segment profit in the second quarter of 2026 compared to the second quarter of 2025. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage to 17.7% in the second quarter of 2026 from 18.7% in the second quarter of 2025. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due to continued affordability challenges.

Current wording

The South East segment had an approximate $10,100, or 18%, decrease in segment profit in the third quarter of 2026 compared to the third quarter of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $25,400, or 4%, coupled with a decrease in gross profit margin percentage to 17.1% in the third quarter of 2026 from 18.0% in the third quarter of 2025. Segment revenues decreased due to a 5% decrease in units settled, primarily attributable to a lower backlog turnover rate quarter over quarter. Gross profit margins were negatively impacted primarily by higher lot costs quarter over quarter.

Previous wording

The South East segment had an approximate $20,500, or 21%, decrease in segment profit in the first six months of 2026 compared to the first six months of 2025. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage to 17.6% in the first six months of 2026 from 19.2% in the first six months of 2025. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due to continued affordability challenges year over year.

Current wording

The South East segment had an approximate $30,600, or 20%, decrease in segment profit in the first nine months of 2026 compared to the first nine months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $41,000, or 2%, coupled with a decrease in gross profit margin percentage to 17.4% in the first nine months of 2026 from 18.7% in the first nine months of 2025. Segment revenues decreased due to a 3% decrease in units settled, primarily attributable to a lower backlog turnover rate year over year. Gross profit margins were negatively impacted primarily by higher lot costs year over year.

Previous wording

Segment New Orders increased 7% while the average sales price of New Orders decreased 7% in the first six months of 2026 compared to the first six months of 2025. New Orders were higher primarily due to a 19% increase in the average number of active communities, offset by a 10% lower sales absorption rate year over year. The average sales price of New Orders was negatively impacted by a shift to lower priced communities in certain markets within the segment.

Current wording

Segment New Orders increased 7% while the average sales price of New Orders decreased 2% in the first nine months of 2026 compared to the first nine months of 2025. New Orders were favorably impacted by a 6% higher sales absorption rate, attributable to better product positioning in certain markets in the current year, coupled with a 2% increase in the average number of active communities within the segment year over year. The average sales price of New Orders was negatively impacted by a shift to lower priced communities in certain 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, 2026 and 2025:

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, 2026 and 2025:

Previous wording

Loan closing volume for the three and six months ended June 30, 2026 decreased by approximately $200,600, or 13%, and $580,500, or 19%, respectively, from the same periods in 2025. These decreases are consistent with the decreases in homebuilding revenue of 11% and 16%, respectively.

Current wording

Loan closing volume for the three and nine months ended September 30, 2026 decreased by approximately $158,000, or 10%, and $738,500, or 16%, respectively, from the same periods in 2025. These decreases are consistent with the decreases in homebuilding revenue of 8% and 13%, respectively.

Previous wording

Segment profit for the three months ended June 30, 2026 decreased by approximately $4,400, or 14%, from the same period in 2025. This decrease was primarily attributable to a decrease of approximately $4,000, 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, 2026 increased by approximately $3,000, or 9%, from the same period in 2025. This increase was primarily attributable to an increase of approximately $4,000, or 8%, in mortgage banking fees due to an increase in gains on sales of loans.

Previous wording

Segment profit for the six months ended June 30, 2026 decreased by approximately $10,100, or 16%, from the same period in 2025. This decrease was primarily attributable to a decrease of approximately $10,400, or 10%, 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, 2026 decreased by approximately $7,100, or 7%, from the same period in 2025. This decrease was primarily attributable to a decrease of approximately $6,400, or 4%, in mortgage banking fees due to a decrease in gains on sales of loans and title fees and lower loan closing volume.

Previous wording

Our effective tax rate for the three and six month periods ended June 30, 2026 was 25.8% and 23.8%, respectively, compared to 25.4% in each respective period of 2025. The effective tax rate for the respective periods is primarily impacted by the income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $900 and $13,500 for the three and six months ended June 30, 2026, respectively, compared to $3,500 and $6,200 for the three and six months ended June 30, 2025, respectively.

Current wording

Our effective tax rate for the three and nine month periods ended September 30, 2026 was 25.7% and 24.5%, respectively, compared to 22.8% and 24.5% for the three and nine months ended September 30, 2025, respectively. The effective tax rate for the respective periods is primarily impacted by the income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $1,500 and $14,900 for the three and nine months ended September 30, 2026, respectively, compared to $13,400 and $19,700 for the three and nine months ended September 30, 2025, 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, 2026, we had approximately $1,100,000 in cash and cash equivalents, approximately $287,200 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, 2026, we had approximately $1,100,000 in cash and cash equivalents, approximately $284,600 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 $737,500 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 $747,200 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 five 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 2026. For the six months ended June 30, 2026, we repurchased 144,896 shares of our common stock at an aggregate purchase price of $989,733. As of June 30, 2026, we had approximately $1,059,864 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 2026. For the nine months ended September 30, 2026, we repurchased 181,984 shares of our common stock at an aggregate purchase price of $1,226,951. As of September 30, 2026, we had approximately $822,646 available under Board approved repurchase authorizations.

Previous 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 $12,800 outstanding as of June 30, 2026. There were no borrowings outstanding under the Credit Agreement as of June 30, 2026.

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 $15,400 outstanding as of September 30, 2026. There were no borrowings outstanding under the Credit Agreement as of September 30, 2026.

Previous wording

For the six months ended June 30, 2026, cash, restricted cash, and cash equivalents decreased by $759,622. Net cash provided by operating activities was $188,156, due primarily to cash provided by earnings for the six months ended June 30, 2026 and a $176,022 reduction in mortgage loans held for sale. In addition, $49,200 of cash was provided by an increase in accounts payable and accrued expenses attributable to an increase in inventory and $45,488 of cash was provided by an increase in customer deposits. Cash was primarily used to fund the increase in inventory of $511,729, attributable to an increase in units under construction as of June 30, 2026 compared to December 31, 2025, and an increase of $106,509 in contract land deposits.

Current wording

For the nine months ended September 30, 2026, cash, restricted cash, and cash equivalents decreased by $787,350. Net cash provided by operating activities was $412,096, due primarily to cash provided by earnings for the nine months ended September 30, 2026 and a $253,805 reduction in mortgage loans held for sale. In addition, $71,657 of cash was provided by an increase in accounts payable and accrued expenses attributable to an increase in inventory and by a $36,154 increase in customer deposits. Cash was primarily used to fund the increase in inventory of $649,226, attributable to an increase in units under construction as of September 30, 2026 compared to December 31, 2025, and an increase of $120,724 in contract land deposits.

Previous wording

Net cash provided by investing activities for the six months ended June 30, 2026 was $3,916, due primarily to cash provided by the sale of our interest in an unconsolidated joint venture of $21,559. Cash was used primarily for investments in unconsolidated joint ventures totaling $6,911 and purchases of property, plant and equipment of $11,023.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2026 was $20,201. Cash was used primarily for investments in unconsolidated joint ventures totaling $12,306 and purchases of property, plant and equipment of $29,879. Cash was provided by the sale of our interest in an unconsolidated joint venture for $21,559.

Previous wording

Net cash used in financing activities was $951,694 for the six months ended June 30, 2026. Cash was used to repurchase 144,896 shares of our common stock at an aggregate purchase price of $989,733 under our ongoing common stock repurchase program, discussed above. Cash was provided from stock option exercise proceeds totaling $56,784.

Current wording

Net cash used in financing activities was $1,179,245 for the nine months ended September 30, 2026. Cash was used to repurchase 181,984 shares of our common stock at an aggregate purchase price of $1,226,951 under our ongoing common stock repurchase program, discussed above. Cash was provided from stock option exercise proceeds totaling $68,555.