Q - LGI Homes,
For the period ended Jun 30, 2025. Filed Aug 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 5, 2025
LGIH$45.57-3.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-04-30.
0001580670-25-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP MeasuresCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0001580670-25-000058
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP MeasuresThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 170 previous paragraphs and 201 current paragraphs.
120 unchanged; 40 reworded; 30 added; 10 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 8 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
Amendment to June 2025 Credit Agreement
Current report
On August 1, 2025, we entered into the Letter Agreement Amendment, which amended the June 2025 Credit Agreement. The Letter Agreement Amendment, among other things, amended (i) the borrowing base by removing model housing units from the borrowing base sublimit, (ii) the financial covenants to (a) decrease the minimum EBITDA to interest expense ratio through December 31, 2026, (b) increase the minimum liquidity amount, (c) decrease the maximum leverage ratio through December 31, 2026 and (d) delete the covenant related to limitations on wholesale sales contracts, (iii) the permitted secured debt basket by increasing the available capacity thereunder and (iv) the restricted payment covenant to restrict the repurchase of shares and payment of dividends through December 31, 2026, subject to the terms and conditions set forth therein. For additional information on the Credit Agreement (including defined terms used in this paragraph), see Note 4, “Notes Payable” to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Current report
LGI Living Loan Agreement
Current report
On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living – SFR 1, LLC (“LGI Living SFR”) entered into a Loan Agreement (the “Loan Agreement”) with Evergreen Residential Capital, LLC, as lender. The Loan Agreement provides for a secured non-recourse loan for up to $50.0 million, which can be increased at the request of LGI Living SFR by up to $75.0 million (for a total of $125.0 million), subject to the terms and conditions of the Loan Agreement. As of July 31, 2025, the total amount of borrowings outstanding under the loan was $50.0 million. The loan matures on July 8, 2030 and bears interest at a rate of 6.433% per annum, which may be adjusted in connection with an increase in the amount of the loan. The loan is unconditionally guaranteed as to payment and performance by the Company under a limited recourse guaranty with respect to (i) certain losses and liabilities to the extent such losses or liabilities are actually incurred by the lender and (ii) the entire amount of the loan upon the occurrence of certain events. The loan is unconditionally guaranteed as to payment and performance by LGI Living – ER FIN, LLC, as the direct owner of the equity interests in LGI Living SFR, but recourse under such guaranty is limited to LGI Living – ER FIN, LLC’s equity interests in LGI Living SFR, which are pledged as collateral for the loan. The loan is also secured by a security interest in all assets of LGI Living SFR, including a mortgage lien on certain of LGI Living SFR’s real property. The Loan Agreement includes certain restrictive covenants that may limit LGI Living SFR’s ability to, among other things, incur additional indebtedness or make certain investments. The Loan Agreement contains representations and warranties, affirmative covenants, and events of default, all of which the Company believes are customary for special purpose subsidiary real estate secured loan agreements. If an event of default exists under the Loan Agreement, the lender will be able to accelerate the maturity of the loan and exercise other rights and remedies.
Current report
One Big Beautiful Bill Act
Current report
On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions affecting corporations. The OBBBA, among other changes, terminates the energy efficient homes tax credit for homes closing after June 30, 2026. However, none of these tax law changes are expected to have an impact on the consolidated financial statements beginning in the period in which the OBBBA was signed into law.
Current report
•Home sales revenues decreased 19.8% to $483.5 million from $602.5 million.
Current report
•Homes closed decreased 20.1% to 1,323 homes from 1,655 homes.
Current report
•Average sales price per home closed increased 0.4% to $365,446 from $364,047.
Current report
•Gross margin as a percentage of home sales revenues decreased to 22.9% from 25.0%.
Current report
•Net income before income taxes decreased 45.3% to $42.0 million from $76.9 million.
Current report
•Net income decreased 46.2% to $31.5 million from $58.6 million.
Current report
•EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 11.4% from 14.7%.
Current report
•Home sales revenues decreased 16.0% to $834.9 million from $993.3 million.
Current report
•Homes closed decreased 15.3% to 2,319 homes from 2,738 homes.
Current report
•Average sales price per home closed decreased 0.8% to $360,028 from $362,801.
Current report
•Gross margin as a percentage of home sales revenues decreased to 22.1% from 24.4%.
Current report
•Net income before income taxes decreased 52.2% to $47.8 million from $100.0 million.
Current report
•Net income decreased 53.0% to $35.5 million from $75.6 million.
Current report
•EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 8.4% from 11.9%.
Current report
Home sales revenues for the three months ended June 30, 2025 were $483.5 million, a decrease of $119.0 million, or 19.8%, from $602.5 million for the three months ended June 30, 2024. The decrease in home sales revenues was primarily due to a 20.1% decrease in homes closed, partially offset by a 0.4% increase in the average sales price per home closed during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the three months ended
Current report
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
Current report
•Home sales revenues in our Central reportable segment decreased by $63.0 million, or 22.7%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 19.2% decrease in the number of homes closed and a 4.4% decrease in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Current report
•Home sales revenues in our Southeast reportable segment decreased by $0.1 million during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 0.4% decrease in the average sales price per home closed, offset by a 0.4% increase in the number of homes closed. The increase in home closings was the result of an increase in community count, partially offset by a lower absorption rate.
Current report
•Home sales revenues in our Northwest reportable segment decreased by $16.5 million, or 15.8%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 14.9% decrease in the number of homes closed and a 1.0% decrease in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Current report
•Home sales revenues in our West reportable segment decreased by $33.9 million, or 16.9%, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, primarily due to a 20.1% decrease in the number of homes closed, partially offset by a 4.1% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Current report
•Home sales revenues in our Florida reportable segment decreased by $44.9 million, or 28.3%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a 29.9% decrease in the number of homes closed, partially offset by a 2.3% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Current report
Selling Expenses. Selling expenses for the six months ended June 30, 2025 were $83.9 million, a decrease of $10.1 million, or 10.7%, from $94.0 million for the six months ended June 30, 2024. The decrease in selling expenses was primarily due to a decrease in sales commissions and other selling expenses, partially offset by an increase in advertising and other personnel selling expenses, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Sales commissions decreased to $33.0 million during the six months ended June 30, 2025 from $44.6 million for the six months ended June 30, 2024, primarily due to a 16.0% decrease in home sales revenues during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Selling expenses as a percentage of home sales revenues were 10.1% and 9.5% for the six months ended June 30, 2025 and 2024, respectively. The increase in selling expenses as a percentage of home sales revenues was primarily due to higher advertising and other personnel expenses, offset by a decrease in commissions during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Current report
General and Administrative. General and administrative expenses for the six months ended June 30, 2025 were $60.6 million, a decrease of $1.4 million, or 2.3%, from $62.0 million for the six months ended June 30, 2024. The decrease in general and administrative expenses was primarily due to a decrease in indirect overhead expenses and bonuses, partially offset by an increase in other expenses. General and administrative expenses as a percentage of home sales revenues were 7.3% and 6.2% for the six months ended June 30, 2025 and 2024, respectively. The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Current report
Net Income. Net income for the six months ended June 30, 2025 was $35.5 million, a decrease of $40.1 million, or 53.0%, from $75.6 million for the six months ended June 30, 2024. The decrease in net income was primarily attributed to overall lower home sales revenues during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Removed paragraphs (10)
Previous report
In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may affect costs for and availability of raw materials or contribute to inflation in the markets in which we operate. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain. To date, we have not seen any impacts from tariffs on product availability or costs. We are working closely with our suppliers to mitigate any potential impacts as well as broadening our sourcing network. To date, we have not experienced any disruptions in our labor base related to immigration policies of the new administration in Washington D.C.
Previous report
On April 28, 2025, we entered into the Sixth Amendment, which amended the 2024 Credit Agreement. The Sixth Amendment, among other things, (a) extended the maturity of the commitments of certain lenders under the Credit Agreement to April 28, 2029, (b) added certain financial institutions as issuers of letters of credit and (c) reset the tangible net worth financial covenant for the period from and after the date of the Sixth Amendment. For additional information on the Credit Agreement (including defined terms used in this paragraph), see Note 4, “Notes Payable” to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous report
•Home sales revenues decreased 10.1% to $351.4 million from $390.9 million.
Previous report
•Homes closed decreased 8.0% to 996 homes from 1,083 homes.
Previous report
•Average sales price per home closed decreased 2.2% to $352,831 from $360,897.
Previous report
•Gross margin as a percentage of home sales revenues decreased to 21.0% from 23.4%.
Previous report
•Net income before income taxes decreased 75.2% to $5.7 million from $23.1 million.
Previous report
•Net income decreased 76.6% to $4.0 million from $17.1 million.
Previous report
•EBITDA (non-GAAP) as a percentage of home sales revenues decreased to 4.2% from 7.8%.
Previous report
•our continued ability to qualify for additional federal energy efficient homes tax credits and the extension of the availability of such tax credits beyond 2032;
Reworded paragraphs (40)
Previous wording
Our results in the first quarter of 2025 were achieved against a challenging macroeconomic backdrop. Mortgage rates have remained persistently high, straining affordability and constraining demand. Against this backdrop, we continued to offer buyers attractive financial incentives to bridge the affordability gap and put homeownership within reach of as many customers as possible. During the three months ended March 31, 2025, we had 996 home closings, compared to 1,083 home closings during the three months ended March 31, 2024. As mortgage rates declined in February and March, both leads and home sales improved materially compared to January, and we ended the quarter with 1,040 homes in backlog.
Current wording
Our results in the second quarter of 2025 were achieved against a challenging macroeconomic backdrop. Mortgage rates have remained persistently high, straining affordability and while the demand environment remains positive, muted consumer sentiment is impacting customers’ willingness to purchase new homes. Against this backdrop, we continued to offer buyers financial incentives in an effort to bridge the affordability gap and put homeownership within reach of as many customers as possible while preserving margins at our targeted level. During the six months ended June 30, 2025, we had 2,319 home closings, compared to 2,738 home closings during the six months ended June 30, 2024.
Previous wording
We sell homes under the LGI Homes and Terrata Homes brands. Our 146 active communities at March 31, 2025 included 17 Terrata Homes communities. At March 31, 2024, we had 120 active communities, including 16 Terrata Homes communities.
Current wording
We sell homes under the LGI Homes and Terrata Homes brands. Our 146 active communities at June 30, 2025 included 16 Terrata Homes communities. At June 30, 2024, we had 128 active communities, including 17 Terrata Homes communities.
Previous wording
•Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 23.6% from 25.3%.
Current wording
•Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 25.5% from 27.0%.
Previous wording
We owned and controlled 67,792 lots at March 31, 2025 as compared to 70,899 lots at December 31, 2024.
Current wording
We owned and controlled 64,756 lots at June 30, 2025 as compared to 67,792 lots at March 31, 2025 and 70,899 lots at December 31, 2024.
Previous wording
The following table sets forth our results of operations for the three months ended March 31, 2025 and 2024:
Current wording
The following table sets forth our results of operations for the three and six months ended June 30, 2025 and 2024:
Previous wording
Included within our home sales revenues for the three months ended March 31, 2025 was $54.5 million in wholesale revenues resulting from 179 home closings, representing 18.0% of the 996 total homes closed during the three months ended March 31, 2025. Included within our home sales revenues for the three months ended March 31, 2024 was $28.6 million in wholesale revenues resulting from 102 home closings, representing 9.4% of the 1,083 total homes closed during the three months ended March 31, 2024. The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to higher demand from our wholesale channel customers during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Current wording
Included within our home sales revenues for the three months ended June 30, 2025 was $71.4 million in wholesale revenues resulting from 237 home closings, representing 17.9% of the 1,323 total homes closed during the three months ended June 30, 2025. Included within our home sales revenues for the three months ended June 30, 2024 was $35.7 million in wholesale revenues resulting from 117 home closings, representing 7.1% of the 1,655 total homes closed during the three months ended June 30, 2024. The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to higher demand from our wholesale channel customers during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.
Previous wording
•Home sales revenues in our Central reportable segment decreased by $2.6 million, or 2.5%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a 5.7% decrease in the average sales price per home closed, partially offset by a 3.4% increase in home closings.
Current wording
•Home sales revenues in our Central reportable segment decreased by $60.4 million, or 34.9%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, due to a 32.7% decrease in the number of homes closed and a 3.2% decrease in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Previous wording
•Home sales revenues in our Southeast reportable segment decreased by $14.8 million, or 12.7%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a 12.1% decrease in the number of homes closed and a decrease in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Current wording
•Home sales revenues in our Southeast reportable segment increased by $14.7 million, or 10.8%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to an 11.2% increase in the number of homes closed, partially offset by a 0.3% decrease in the average sales price per home closed. The increase in home closings was the result of an increase in the average community count, partially offset by a lower absorption rate.
Previous wording
•Home sales revenues in our Northwest reportable segment decreased by $1.8 million, or 5.1%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to a 9.5% decrease in the average sales price per home closed, partially offset by a 4.8% increase in the number of homes closed.
Current wording
•Home sales revenues in our Northwest reportable segment decreased by $14.6 million, or 21.5%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a 24.2% decrease in the number of homes closed, partially offset by a 3.6% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Previous wording
•Home sales revenues in our West reportable segment decreased by $6.1 million, or 8.4%, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to an 11.2% decrease in the number of homes closed, partially offset by a 3.1% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Current wording
•Home sales revenues in our West reportable segment decreased by $27.8 million, or 21.7%, during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, primarily due to a 25.3% decrease in the number of homes closed, partially offset by a 4.8% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Previous wording
•Home sales revenues in our Florida reportable segment decreased by $14.1 million, or 23.0%, during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to a 22.6% decrease in the number of homes closed and a decrease in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Current wording
•Home sales revenues in our Florida reportable segment decreased by $30.8 million, or 31.6%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a 34.4% decrease in the number of homes closed, partially offset by a 4.3% increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate, partially offset by an increase in the average community count.
Previous wording
Cost of Sales and Gross Margin (home sales revenues less cost of sales). Cost of sales for the three months ended March 31, 2025 was $277.7 million, a decrease of $21.7 million, or 7.3%, from $299.5 million for the three months ended March 31, 2024. This overall decrease was primarily due to an 8.0% decrease in homes closed. Gross margin for the three months ended March 31, 2025 was $73.7 million, a decrease of $17.7 million, or 19.4%, from $91.4 million for the three months ended March 31, 2024. Gross margin as a percentage of home sales revenues was 21.0% for the three months ended March 31, 2025 and 23.4% for the three months ended March 31, 2024. The decrease in gross margin as a percentage of home sales revenues during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily due to a lower average sales price per home closed, a higher number of wholesale closings, higher lot costs and higher capitalized interest as a percentage of revenue as well as the impact of sales incentives offered during the three months ended March 31, 2025.
Current wording
Cost of Sales and Gross Margin (home sales revenues less cost of sales). Cost of sales for the three months ended June 30, 2025 was $372.9 million, a decrease of $78.7 million, or 17.4%, from $451.6 million for the three months ended June 30, 2024. This overall decrease was primarily due to a 20.1% decrease in homes closed. Gross margin for the three months ended June 30, 2025 was $110.6 million, a decrease of $40.3 million, or 26.7%, from $150.9 million for the three months ended June 30, 2024. Gross margin as a percentage of home sales revenues was 22.9% for the three months ended June 30, 2025 and 25.0% for the three months ended June 30, 2024. The decrease in gross margin as a percentage of home sales revenues was primarily due to a higher number of wholesale closings, higher lot costs, higher capitalized interest, and higher indirect overhead as a percentage of revenue, partially offset by a decrease in sales incentives offered during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.
Previous wording
Selling Expenses. Selling expenses for the three months ended March 31, 2025 were $42.3 million, an increase of $1.2 million, or 3.0%, from $41.1 million for the three months ended March 31, 2024. The increase in selling expenses was primarily due to an increase in advertising expense and an increase in personnel costs as a result of an increase in communities, partially offset by a decrease in sales commissions for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Sales commissions decreased to $14.0 million during the three months ended March 31, 2025 from $17.4 million for the three months ended March 31, 2024, primarily due to a decrease in outside commissions and our in-house commissions. Selling expenses as a percentage of home sales revenues were 12.0% and 10.5% for the three months ended March 31, 2025 and 2024, respectively. The increase in selling expenses as a percentage of home sales revenues was primarily due to higher advertising and other personnel expenses offset by commissions during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Current wording
Selling Expenses. Selling expenses for the three months ended June 30, 2025 were $41.6 million, a decrease of $11.3 million, or 21.3%, from $52.9 million for the three months ended June 30, 2024. The decrease in selling expenses was primarily due to a decrease in sales commissions and, to a lesser extent, personnel expenses. Sales commissions decreased to $18.9 million for the three months ended June 30, 2025 from $27.2 million for the three months ended June 30, 2024, primarily due to a 19.8% decrease in home sales revenues during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Selling expenses as a percentage of home sales revenues were 8.6% and 8.8% for the three months ended June 30, 2025 and 2024, respectively. The decrease in selling expenses as a percentage of home sales revenues was primarily due to lower commissions and other personnel expenses during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.
Previous wording
General and Administrative. General and administrative expenses for the three months ended March 31, 2025 were $31.2 million, a decrease of $0.3 million, or 1.1%, from $31.5 million for the three months ended March 31, 2024. General and administrative expenses as a percentage of home sales revenues were 8.9% and 8.1% for the three months ended March 31, 2025 and 2024, respectively. The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Current wording
General and Administrative. General and administrative expenses for the three months ended June 30, 2025 were $29.4 million, a decrease of $1.1 million, or 3.6%, from $30.5 million for the three months ended June 30, 2024. The decrease in general and administrative expenses was primarily due to a decrease in indirect overhead expenses and bonuses, partially offset by an increase in other expenses. General and administrative expenses as a percentage of home sales revenues were 6.1% and 5.1% during the three months ended June 30, 2025 and 2024, respectively. The increase in general and administrative expenses as a percentage of home sales revenues was primarily due to lower home sales revenues during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.
Previous wording
Other Income, Net. Other income, net of other expenses was $5.6 million for the three months ended March 31, 2025, an increase of $1.2 million from $4.4 million for the three months ended March 31, 2024. The increase in other income, net of other expenses, primarily reflects gains realized from the sale of residential lots not directly associated with our core homebuilding operations.
Current wording
Other Income, Net. Other income, net of other expenses was $2.4 million for the three months ended June 30, 2025, a decrease of $6.9 million from $9.4 million for the three months ended June 30, 2024. The decrease in other income, net of other expenses, primarily reflects the decrease in income associated with our investment in unconsolidated entities, the decrease in interest income and the decrease in gains realized from the sale of residential lots not directly associated with our core homebuilding operations.
Previous wording
Operating Income and Net Income before Income Taxes. Operating income for the three months ended March 31, 2025 was $0.2 million, a decrease of $18.6 million, or 99.1%, from $18.7 million for the three months ended March 31, 2024. Net income before income taxes for the three months ended March 31, 2025 was $5.7 million, a decrease of $17.4 million, or 75.2%, from $23.1 million for the three months ended March 31, 2024. The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin and higher advertising and other costs associated with the increase in average community count during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Our reportable segments contributed to net income before income taxes during the three months ended March 31, 2025 as follows: Central - $(3.1) million, or (54.1)%; Southeast - $8.1 million, or 141.8%; Northwest - $1.2 million, or 21.1%; West - $2.5 million, or 43.4%; and Florida - $(2.5) million, or (43.0)%.
Current wording
Operating Income and Net Income before Income Taxes. Operating income for the three months ended June 30, 2025 was $39.6 million, a decrease of $27.9 million, or 41.3%, from $67.5 million for the three months ended June 30, 2024. Net income before income taxes for the three months ended June 30, 2025 was $42.0 million, a decrease of $34.8 million, or 45.3%, from $76.9 million for the three months ended June 30, 2024. The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin and higher indirect overhead expenses associated with the increase in average community count during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. Our reportable segments contributed to net income before income taxes during the three months ended June 30, 2025 as follows: Central - $9.1 million, or 21.5%; Southeast - $18.2 million, or 43.2%; Northwest - $2.2 million, or 5.2%; West - $10.7 million, or 25.5%; and Florida - $1.9 million, or 4.6%.
Previous wording
Income Taxes. Income tax provision for the three months ended March 31, 2025 was $1.7 million, a decrease of $4.3 million, or 71.4%, from income tax provision of $6.0 million for the three months ended March 31, 2024. The decrease in our income tax provision is primarily due to the overall decrease in net income before income taxes. The increase in our effective tax rate to 30.2% for the three months ended March 31, 2025 from 26.2% for the three months ended March 31, 2024 was primarily a result of an increase in the rate for the compensation cost in excess of deductions for share-based payments.
Current wording
Income Taxes. Income tax provision for the three months ended June 30, 2025 was $10.5 million, a decrease of $7.8 million, or 42.6%, from income tax provision of $18.3 million for the three months ended June 30, 2024. The decrease in our income tax provision is primarily due to the overall decrease in net income before income taxes. The increase in our effective tax rate to 25.0% for the three months ended June 30, 2025 from 23.8% for the three months ended June 30, 2024 was primarily a result of an increase in the rate for state income taxes, net of the federal benefit, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.
Previous wording
Net Income. Net income for the three months ended March 31, 2025 was $4.0 million, a decrease of $13.1 million, or 76.6%, from $17.1 million for the three months ended March 31, 2024. The decrease in net income was primarily attributed to overall lower homes closed, home sales revenues and gross margin during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Current wording
Net Income. Net income for the three months ended June 30, 2025 was $31.5 million, a decrease of $27.0 million, or 46.2%, from $58.6 million for the three months ended June 30, 2024. The decrease in net income was primarily attributed to overall lower home sales revenues and gross margin during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.
Previous wording
Home sales revenues for the three months ended March 31, 2025 were $351.4 million, a decrease of $39.4 million, or 10.1%, from $390.9 million for the three months ended March 31, 2024. The decrease in home sales revenues was primarily due to an 8.0% decrease in homes closed and a decrease in the average sales price per home closed during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The overall increase in average community count relates to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The average sales price per home closed during the three months ended March 31, 2025 was $352,831, a decrease of $8,065, or 2.2%, from the average sales price per home closed of $360,897 for the three months ended March 31, 2024. The decrease in the average sales price per home closed was primarily due to geographic mix and an increase in sales incentives. The overall decrease in absorption rate generally relates to the impact of ongoing affordability constraints, new community openings, and the overall increase in community count.
Current wording
Home sales revenues for the six months ended June 30, 2025 were $834.9 million, a decrease of $158.4 million, or 16.0%, from $993.3 million for the six months ended June 30, 2024. The decrease in home sales revenues was primarily due to a 15.3% decrease in homes closed and a 0.8% decrease in the average sales price per home closed during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The overall decrease in home closings was a result of a lower absorption rate, partially offset by a higher average community count, during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The overall increase in average community count relates to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. The average sales price per home closed during the six months ended June 30, 2025 was $360,028, a decrease of $2,773, or 0.8%, from the average sales price per home closed of $362,801 for the six months ended June 30, 2024. The decrease in the average sales price per home closed was primarily due to geographic mix and an increase in the number of wholesale homes closed. The overall decrease in absorption rate generally relates to the impact of ongoing affordability constraints, new community openings, and the overall increase in community count.
Previous wording
Our net orders decreased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily due to the increase in new communities which typically open at a slower sales pace and overall lower demand. The number of homes in our backlog at March 31, 2025 decreased 22.1% compared to March 31, 2024. The decrease generally relates to the impact of ongoing affordability constraints and our decision to limit the use of incentives during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Current wording
Our net orders decreased for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to ongoing affordability constraints and other challenges in the overall housing market including muted consumer sentiment impacting customers’ willingness to purchase new homes. As a result of the slower sales pace, the number of homes in our backlog at June 30, 2025 decreased 42.0% compared to June 30, 2024.
Previous wording
(4)As of March 31, 2025, we had 253 units related to bulk sales agreements associated with our wholesale business.
Current wording
(4)As of June 30, 2025, we had 91 units related to bulk sales agreements associated with our wholesale business.
Previous wording
(5)As of March 31, 2024, we had 178 units related to bulk sales agreements associated with our wholesale business.
Current wording
(5)As of June 30, 2024, we had 181 units related to bulk sales agreements associated with our wholesale business.
Previous wording
Our lot inventory decreased to 67,792 owned or controlled lots as of March 31, 2025 from 70,899 owned or controlled lots as of December 31, 2024, primarily related to our discipline in the evaluation and selective approval of new land deals.
Current wording
Our lot inventory decreased to 64,756 owned or controlled lots as of June 30, 2025 from 70,899 owned or controlled lots as of December 31, 2024, primarily related to our disciplined underwriting criteria and selective approval of new land deals.
Previous wording
The table below shows (i) home closings by reportable segment for the three months ended March 31, 2025 and (ii) our owned or controlled lots by reportable segment as of March 31, 2025.
Current wording
The table below shows (i) home closings by reportable segment for the six months ended June 30, 2025 and (ii) our owned or controlled lots by reportable segment as of June 30, 2025.
Previous wording
(1)Of the 53,761 owned lots as of March 31, 2025,37,064 were raw/under development lots and 16,697 were finished lots.
Current wording
(1)Of the 53,555 owned lots as of June 30, 2025,37,374 were raw/under development lots and 16,181 were finished lots.
Previous wording
When entering a new community, we intend to build a sufficient number of move-in ready homes to meet our budgets. We base future home starts on home closings. As homes are closed, we start more homes to maintain our inventory. As of March 31, 2025, we had a total of 2,702 completed homes, including information centers, and 1,522 homes in progress.
Current wording
When entering a new community, we intend to build a sufficient number of move-in ready homes to meet our budgets. We base future home starts on home closings. As homes are closed, we start more homes to maintain our inventory. As of June 30, 2025, we had a total of 2,524 completed homes, including information centers, and 1,512 homes in progress.
Previous wording
As of March 31, 2025, we had $57.6 million of cash and cash equivalents. Cash flows for each of our active communities depend on the status of the development cycle and can differ substantially from reported earnings.
Current wording
As of June 30, 2025, we had $59.6 million of cash and cash equivalents. Cash flows for each of our active communities depend on the status of the development cycle and can differ substantially from reported earnings.
Previous wording
On April 28, 2025, we entered into a Sixth Amendment to Fifth Amended and Restated Credit Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Sixth Amendment”), which amended the 2024 Credit Agreement (as so amended by the Sixth Amendment, the “Credit Agreement”). The Credit Agreement provides for a $1.1825 billion revolving credit facility, which can be increased at the request of the Company by up to $95.0 million, subject to the terms and conditions of the Credit Agreement. The Credit Agreement matures on April 28, 2029 with respect to $972.5 million, or 82.2%, of the $1.1825 billion of commitments thereunder and on April 28, 2028 with respect to 17.8% of the commitments thereunder.
Current wording
On August 1, 2025, we entered into a Letter Agreement with several financial institutions, and Wells Fargo Bank, National Association, as administrative agent (the “Letter Agreement Amendment”), which amended the June 2025 Credit Agreement (as so amended by the Letter Agreement Amendment, the “Credit Agreement”). The Credit Agreement provides for a $1.1825 billion revolving credit facility, which can be increased at the request of the Company by up to $95.0 million, subject to the terms and conditions of the Credit Agreement. The Credit Agreement matures on April 28, 2029 with respect to $972.5 million, or 82.2%, of the $1.1825 billion of commitments thereunder and on April 28, 2028 with respect to 17.8% of the commitments thereunder.
Previous wording
The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 8.750% Senior Notes due 2028 (the “2028 Senior Notes”), our 4.000% Senior Notes due 2029 (the “2029 Senior Notes”) and our 7.000% Senior Notes due 2032 (the “2032 Senior Notes”), may not exceed the borrowing base under the Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of March 31, 2025, the borrowing base under the 2024 Credit Agreement was $2.0 billion, of which the maximum available to borrow was $2.0 billion. As of March 31, 2025, borrowings under the 2024 Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $1.6 billion, $24.5 million of letters of credit were outstanding and $302.4 million was available to borrow under the 2024 Credit Agreement.
Current wording
The borrowings and letters of credit outstanding under the Credit Agreement, together with the outstanding principal balance of our 8.750% Senior Notes due 2028 (the “2028 Senior Notes”), our 4.000% Senior Notes due 2029 (the “2029 Senior Notes”) and our 7.000% Senior Notes due 2032 (the “2032 Senior Notes”), may not exceed the borrowing base under the Credit Agreement. The borrowing base primarily consists of a percentage of commercial land, land held for development, lots under development and finished lots held by the Company and its subsidiaries that guarantee the obligations under the Credit Agreement. As of June 30, 2025, the borrowing base under the June 2025 Credit Agreement was $2.1 billion, of which the maximum available to borrow was $2.0 billion. As of June 30, 2025, borrowings under the June 2025 Credit Agreement and the outstanding principal amount of the 2028 Senior Notes, the 2029 Senior Notes and the 2032 Senior Notes totaled approximately $1.8 billion, $27.4 million of letters of credit were outstanding and $263.0 million was available to borrow under the June 2025 Credit Agreement.
Previous wording
Borrowings under the Credit Agreement bear interest, payable monthly in arrears, at the Company’s option, at either (1) the Adjusted Term SOFR (defined as a term SOFR that is based on a fixed 1, 3 or 6 month interest period, as selected by the Company, plus a 10, 15 or 25 basis point adjustment, respectively), which rate is subject to a 50 basis point floor, plus an applicable margin ranging from 145 basis points to 210 basis points (the “Applicable Margin”) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or (2) the Base Rate (defined as a term SOFR that is based on a daily variable 1 month interest period plus a 10 basis point adjustment), subject to a 50 basis point floor, plus the Applicable Margin. At March 31, 2025, the Applicable Margin was 1.85%, and SOFR was 4.32%, subject to the 0.50% SOFR floor as included in the 2024 Credit Agreement.
Current wording
Borrowings under the Credit Agreement bear interest, payable monthly in arrears, at the Company’s option, at either (1) the Adjusted Term SOFR (defined as a term SOFR that is based on a fixed 1, 3 or 6 month interest period, as selected by the Company, plus a 10, 15 or 25 basis point adjustment, respectively), which rate is subject to a 50 basis point floor, plus an applicable margin ranging from 145 basis points to 210 basis points (the “Applicable Margin”) based on the Company’s leverage ratio as determined in accordance with a pricing grid, or (2) the Base Rate (defined as a term SOFR that is based on a daily variable 1 month interest period plus a 10 basis point adjustment), subject to a 50 basis point floor, plus the Applicable Margin. At June 30, 2025, the Applicable Margin was 1.85%, and SOFR was 4.33%, subject to the 0.50% SOFR floor as included in the June 2025 Credit Agreement.
Previous wording
The Credit Agreement contains various financial covenants, including a minimum tangible net worth, a leverage ratio, a minimum liquidity amount and an EBITDA to interest expense ratio. The Credit Agreement contains various covenants that, among other restrictions, limit the amount of our additional debt and our ability to make certain investments. At March 31, 2025, we were in compliance with all of the covenants contained in the 2024 Credit Agreement.
Current wording
The Credit Agreement contains various financial covenants, including a minimum tangible net worth, a maximum leverage ratio, a minimum liquidity amount and a minimum EBITDA to interest expense ratio. The Credit Agreement contains various covenants that, among other restrictions, limit the amount of our additional debt and our ability to make certain investments. At June 30, 2025, we were in compliance with all of the covenants contained in the June 2025 Credit Agreement.
Previous wording
Under these letters of credit, surety bonds and financial guarantees, we are committed to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $427.2 million as of March 31, 2025. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and surety bonds are not generally released until all development and construction activities are completed. We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of March 31, 2025 will be drawn upon.
Current wording
Under these letters of credit, surety bonds and financial guarantees, we are committed to perform certain development and construction activities and provide certain guarantees in the normal course of business. Outstanding letters of credit, surety bonds and financial guarantees under these arrangements totaled $431.4 million as of June 30, 2025. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and surety bonds are not generally released until all development and construction activities are completed. We do not believe that it is probable that any outstanding letters of credit, surety bonds or financial guarantees as of June 30, 2025 will be drawn upon.
Previous wording
In February 2022, our Board of Directors (the “Board”) approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws. During the three months ended March 31, 2025 and 2024, we repurchased 41,685 shares of our common stock for $3.1 million to be held as treasury stock and 89,227 shares of our common stock for $10.0 million to be held as treasury stock, respectively. A total of 3,289,024 shares of our common stock has been repurchased since our stock repurchase program commenced. As of March 31, 2025, we may purchase up to $177.7 million of shares of our common stock under our stock repurchase program. The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements. Our stock repurchase program may be modified, discontinued or suspended at any time.
Current wording
In February 2022, our Board of Directors (the “Board”) approved a $200.0 million increase to our previously authorized stock repurchase program, pursuant to which we may purchase up to $550.0 million of shares of our common stock through open market transactions, privately negotiated transactions or otherwise in accordance with applicable laws. During the three and six months ended June 30, 2025, we repurchased 367,568 shares of our common stock at a total cost, including commissions and excise taxes, of $20.6 million and 409,253 shares of our common stock at a total cost, including commissions and excise taxes, of $23.6 million, respectively, to be held as treasury stock. During the three and six months ended June 30, 2024, we repurchased 83,763 shares of our common stock at a total cost, including commissions and excise taxes, of $8.0 million and 172,990 shares of our common stock at a total cost, including commissions and excise taxes, of $18.0 million, respectively, to be held as treasury stock. A total of 3,656,592 shares of our common stock has been repurchased since our stock repurchase program commenced in 2022. As of June 30, 2025, we may purchase up to $157.3 million of shares of our common stock under our stock repurchase program. The timing, amount and other terms and conditions of any repurchases of shares of our common stock under our stock repurchase program will be determined by our management at its discretion based on a variety of factors, including the market price of our common stock, corporate considerations, general market and economic conditions and legal requirements. Our stock repurchase program may be modified, discontinued or suspended at any time.
Previous wording
Net cash used in operating activities was $127.1 million during the three months ended March 31, 2025. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development. Net cash used in operating activities during the three months ended March 31, 2025 was primarily driven by cash outflow from the $186.6 million decrease in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and a $27.9 million decrease in the net change in accrued expenses and other liabilities, partially offset by increases in the net changes of $43.8 million in other assets and $18.6 million in accounts payable.
Current wording
Net cash used in operating activities was $213.5 million during the six months ended June 30, 2025. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development. Net cash used in operating activities during the six months ended June 30, 2025 was primarily driven by cash outflow from the $286.7 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and the $30.0 million decrease in the net change in accrued expenses and other liabilities, partially offset by the $43.6 million decrease in the net change in other assets and the $12.8 million increase in the net change of accounts payable.
Previous wording
Net cash used in operating activities was $99.5 million during the three months ended March 31, 2024. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development. Net cash used in operating activities during the three months ended March 31, 2024 was primarily driven by cash outflow from the $139.6 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and the $16.6 million decrease in the net change in accrued expenses and other liabilities, partially offset by net income of $17.1 million as well as the $14.2 million increase in accounts receivable and the $14.5 million increase in the net change in accounts payable.
Current wording
Net cash used in operating activities was $183.0 million during the six months ended June 30, 2024. The primary drivers of operating cash flows are typically cash earnings and changes in inventory levels, including land acquisition and development. Net cash used in operating activities during the six months ended June 30, 2024 was primarily driven by cash outflow from the $287.2 million increase in the net change in real estate inventory, which was primarily related to our homes under construction and land acquisitions and development level of activity and the $9.1 million decrease in the net change in accrued expenses and other liabilities, partially offset by net income of $75.6 million and the $35.1 million increase in the net change in accounts payable.
Previous wording
Net cash used in investing activities was $0.2 million during the three months ended March 31, 2025, primarily due to an additional $1.5 million investment in unconsolidated entities, offset by $2.1 million in return of capital.
Current wording
Net cash provided by investing activities was $2.1 million during the six months ended June 30, 2025, primarily due to $6.4 million in return of capital, partially offset by an additional $3.4 million investment in unconsolidated entities.
Previous wording
Net cash provided by investing activities was $2.0 million during the three months ended March 31, 2024, primarily due to proceeds from the sale of assets, offset by the purchase of property and equipment.
Current wording
Net cash used in investing activities was $2.9 million during the six months ended June 30, 2024, primarily due to the purchase of property and equipment and additional investment in unconsolidated entities.
Previous wording
Net cash provided by financing activities was $97.5 million during the three months ended March 31, 2024, primarily driven by $172.4 million of borrowings offset by $39.0 million of repayments on our credit agreement then in effect, and payments of $27.3 million related to a financing arrangement with a third-party land banker. In addition, during the three months ended March 31, 2024, we repurchased $10.0 million of shares of our common stock under our stock repurchase program to be held as treasury stock.
Current wording
Net cash provided by financing activities was $217.8 million during the six months ended June 30, 2025, primarily driven by $390.6 million of borrowings under our credit agreement then in effect, offset by $130.0 million of repayments on our credit agreement then in effect and payments of $17.5 million related to a financing arrangement with a third-party land banker. In addition, during the six months ended June 30, 2025, we repurchased $23.6 million of shares of our common stock under our stock repurchase program to be held as treasury stock.
Previous wording
Net cash provided by financing activities was $131.8 million during the three months ended March 31, 2025, primarily driven by $172.5 million of borrowings under our 2024 Credit Agreement, offset by $30.0 million of repayments on our 2024 Credit Agreement and payments of $8.6 million related to a financing arrangement with a third-party land banker. In addition, during the three months ended March 31, 2025, we repurchased $3.1 million of shares of our common stock under our stock repurchase program to be held as treasury stock.
Current wording
Net cash provided by financing activities was $188.0 million during the six months ended June 30, 2024, primarily driven by $349.1 million of borrowings under our credit agreement then in effect, offset by $99.0 million of repayments on our credit agreement then in effect and payments of $46.7 million related to a financing arrangement with a third-party land banker. In addition, during the six months ended June 30, 2024, we repurchased $18.0 million of shares of our common stock under our stock repurchase program to be held as treasury stock.
Previous wording
We believe that there have been no significant changes to our critical accounting policies and estimates during the three months ended March 31, 2025 as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Current wording
We believe that there have been no significant changes to our critical accounting policies and estimates during the six months ended June 30, 2025 as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Current report — wording carried from elsewhere
Key financial results as of and for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, were as follows:
Current report — wording carried from elsewhere
•Adjusted gross margin (non-GAAP) as a percentage of home sales revenues decreased to 24.7% from 26.3%.
Current report — wording carried from elsewhere
For reconciliations of the non-GAAP financial measures of adjusted gross margin and EBITDA to the most directly comparable GAAP financial measures, please see “—Non-GAAP Measures.”
Current report — wording carried from elsewhere
June 30, 2025 as compared to the three months ended June 30, 2024. The overall increase in average community count relates to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The average sales price per home closed during the three months ended June 30, 2025 was $365,446, an increase of $1,400, or 0.4%, from the average sales price per home closed of $364,047 for the three months ended June 30, 2024. The increase in the average sales price per home closed was primarily due to geographic mix. The overall decrease in absorption rate generally relates to the impact of ongoing affordability constraints, new community openings, and the overall increase in community count.
Current report — wording carried from elsewhere
Homes Sales. Our home sales revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the six months ended June 30, 2025 and 2024 were as follows (revenues in thousands):
Current report — wording carried from elsewhere
Included within our home sales revenues for the six months ended June 30, 2025 was $125.9 million in wholesale revenues resulting from 416 home closings, representing 17.9% of the 2,319 total homes closed during the six months ended June 30, 2025. Included within our home sales revenues for the six months ended June 30, 2024 was $64.3 million in wholesale revenues resulting from 219 home closings, representing 8.0% of the 2,738 total homes closed during the six months ended June 30, 2024. The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to higher demand from our wholesale channel customers during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Current report — wording carried from elsewhere
Cost of Sales and Gross Margin (home sales revenues less cost of sales). Cost of sales for the six months ended June 30, 2025 was $650.6 million, a decrease of $100.5 million, or 13.4%, from $751.1 million for the six months ended June 30, 2024. This overall decrease was primarily due to a 15.3% decrease in homes closed. Gross margin for the six months ended June 30, 2025 was $184.3 million, a decrease of $58.0 million, or 23.9%, from $242.3 million for the six months ended June 30, 2024. Gross margin as a percentage of home sales revenues was 22.1% for the six months ended June 30, 2025 and 24.4% for the six months ended June 30, 2024. The decrease in gross margin as a percentage of home sales revenues was primarily due to a lower average sales price per home closed, a higher number of wholesale closings, higher lot costs and higher capitalized interest as a percentage of revenue, partially offset by a decrease in sales incentives offered during the six months ended June 30, 2025.
Current report — wording carried from elsewhere
Other Income, Net. Other income, net of other expenses was $8.0 million for the six months ended June 30, 2025, a decrease of $5.7 million from $13.7 million for the six months ended June 30, 2024. The decrease in other income, net of other expenses, primarily reflects the decrease in income associated with our investment in unconsolidated entities and the decrease in interest income, partially offset by gains realized from the sale of residential lots not directly associated with our core homebuilding operations.
Current report — wording carried from elsewhere
Operating Income and Net Income before Income Taxes. Operating income for the six months ended June 30, 2025 was $39.8 million, a decrease of $46.5 million, or 53.9%, from $86.3 million for the six months ended June 30, 2024. Net income before income taxes for the six months ended June 30, 2025 was $47.8 million, a decrease of $52.2 million, or 52.2%, from $100.0 million for the six months ended June 30, 2024. The overall decreases in operating income and net income before income taxes were primarily due to overall lower home closings at a lower absorption rate, lower gross margin and higher advertising and other costs associated with the increase in average community count during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. Our reportable segments contributed to net income before income taxes during the six months ended June 30, 2025 as follows: Central - $6.0 million, or 12.5%; Southeast - $26.3 million, or 55.0%; Northwest - $3.4 million, or 7.1%; West - $13.2 million, or 27.7%; and Florida - $(0.5) million, or (1.1)%.
Current report — wording carried from elsewhere
Income Taxes. Income tax provision for the six months ended June 30, 2025 was $12.2 million, a decrease of $12.1 million, or 49.7%, from income tax provision of $24.4 million for the six months ended June 30, 2024. The decrease in our income tax provision is primarily due to the overall decrease in net income before income taxes. The increase in our effective tax rate to 25.6% for the six months ended June 30, 2025 from 24.4% for the six months ended June 30, 2024 was primarily a result of an increase in the rate for state income taxes, net of the federal benefit, the compensation cost in excess of deductions for share-based payments, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.