LGI Homes, Inc.

Previous wording

For purposes of this Management’s Discussion and Analysis of Financial Condition and Results of Operation, references to “we,” “our,” “us” or similar terms refer to LGI Homes, Inc. and its subsidiaries.

Current wording

For purposes of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, references to “we,” “our,” “us” or similar terms refer to LGI Homes, Inc. and its subsidiaries.

Previous wording

We delivered positive second quarter 2026 results that were in line with our expectations, despite a macroeconomic backdrop that remains challenging. Throughout the quarter, we continued executing on our strategy of delivering affordable homes to entry-level buyers across our markets. Persistently high mortgage rates continue to be a key pressure point for entry-level buyers. During the quarter, mortgage rates trended upward, driven by ongoing inflation, economic uncertainty, and geopolitical developments, including the conflict in the Middle East. Additionally, subdued consumer sentiment continues to impact buyers’ willingness to purchase new homes. In response to these dynamics, we continued offering affordable, move-in ready homes supported by compelling financial incentives and targeted discounts on older completed inventory. These strategies are designed to bridge the ongoing affordability gap and make homeownership accessible to as many customers as possible.

Current wording

We delivered positive third quarter 2026 financial results that were in line with our previously announced guidance, despite a macroeconomic backdrop that remains challenging. Throughout the quarter, we continued executing on our strategy of delivering affordable homes to entry-level buyers across our markets. Persistently high mortgage rates continue to be a key pressure point for entry-level buyers. During the quarter, mortgage rates trended upward to approximately 7% for a 30-year fixed loan, and the 10-year U.S. Treasury yield rose to approximately 5%, driven by ongoing inflation, economic uncertainty, and geopolitical developments, including the conflict in the Middle East, which, together with subdued consumer sentiment, continued to pressure affordability and make it harder for entry-level buyers to qualify for a mortgage. These pressures weighed on demand: net orders for the nine months ended September 30, 2026 decreased 30.0% to 2,869 homes, with the decline more pronounced in the third quarter, and our cancellation rate rose to 48.9% as more buyers were unable to secure or retain mortgage financing. As a result, our ending backlog declined 47.5% to 685 homes.

Previous wording

For the three months ended June 30, 2026, we closed 1,440 homes, including 75 currently and previously leased single-family homes. Excluding the 75 currently or previously leased single-family homes, our average sales price per home closed was $367,407. For the three months ended June 30, 2025, we closed 1,323 homes with an average sales price per home closed of $365,446.

Current wording

For the three months ended September 30, 2026, we closed 1,222 homes, including 33 currently and previously leased single-family homes. Excluding the 33 currently or previously leased single-family homes, we closed 1,189 homes at an average sales price per home closed of $367,962. For the three months ended September 30, 2025, we closed 1,107 homes, including 42 currently and previously leased single-family homes. Excluding the 42 currently or previously leased single-family homes, we closed 1,065 homes with an average sales price per home closed of $372,424.

Previous wording

For the six months ended June 30, 2026, we closed 2,356 homes, including 110 currently and previously leased single-family homes. Excluding the 110 currently or previously leased single-family homes, our average sales price per home closed was $365,649. For the six months ended June 30, 2025, we closed 2,319 homes with an average sales price per home closed of $360,028.

Current wording

For the nine months ended September 30, 2026, we closed 3,578 homes, including 143 currently and previously leased single-family homes. Excluding the 143 currently or previously leased single-family homes, we closed 3,435 homes at an average sales price per home closed of $366,449. For the nine months ended September 30, 2025, we closed 3,426 homes, including 42 currently or previously leased single-family homes. Excluding the 42 currently or previously leased single-family homes, we closed 3,384 homes with an average sales price per home closed of $363,929.

Previous wording

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

Credit Agreement matures on October 9, 2030 with respect to $855.0 million, or 73.3%, of the approximately $1.166 billion of commitments thereunder, on April 28, 2029 with respect to 18.4% of the commitments thereunder and on April 28, 2028 with respect to 8.3% of the commitments thereunder. For additional information on the Credit Agreement (including defined terms used in this paragraph), see Note 4, “Notes Payable” to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

•Adjusted homebuilding gross margin (non-GAAP) as a percentage of homebuilding revenues decreased to 23.2% from 25.5%.

Current wording

•Adjusted homebuilding gross margin (non-GAAP) as a percentage of homebuilding revenues decreased to 23.7% from 24.5%.

Previous wording

•EBITDA (non-GAAP) as a percentage of total revenues increased to 8.2% from 8.0%.

Current wording

•EBITDA (non-GAAP) as a percentage of total revenues increased to 11.2% from 9.6%.

Previous wording

Key financial results as of and for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, were as follows:

Current wording

Key financial results as of and for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, were as follows:

Previous wording

•Adjusted homebuilding gross margin (non-GAAP) as a percentage of homebuilding revenues decreased to 23.3% from 24.7%.

Current wording

•Adjusted homebuilding gross margin (non-GAAP) as a percentage of homebuilding revenues decreased to 23.4% from 24.6%.

Previous wording

We owned and controlled 57,406 lots at June 30, 2026 as compared to 59,028 lots at March 31, 2026 and 60,842 lots at December 31, 2025.

Current wording

We owned and controlled 58,400 lots at September 30, 2026 as compared to 57,406 lots at June 30, 2026 and 60,842 lots at December 31, 2025.

Previous wording

The following table sets forth our results of operations for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table sets forth our results of operations for the three and nine months ended September 30, 2026 and 2025:

Previous wording

(1)Homebuilding gross margin is homebuilding revenues less homebuilding costs.

Current wording

(4)Homebuilding gross margin is homebuilding revenues less homebuilding costs.

Previous wording

(5)Calculated as a percentage of total revenues.

Current wording

(5)Calculated as a percentage of homebuilding revenues.

Previous wording

(3)Adjusted homebuilding gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define homebuilding gross margin excluding inventory impairment as homebuilding gross margin less inventory impairment charges. We define adjusted homebuilding gross margin as homebuilding gross margin excluding inventory impairment, less capitalized interest, and adjustments resulting from the application of purchase accounting included in the cost of sales. Our management believes adjusted homebuilding gross margin is useful because it isolates the impact that capitalized interest, purchase accounting adjustments and inventory impairment have on homebuilding gross margin. However, because adjusted homebuilding gross margin excludes capitalized interest, purchase accounting adjustments and inventory impairment, which have real economic effects and could impact our results, the utility of adjusted homebuilding gross margin as a measure of our operating performance may be limited. In addition, other companies may not calculate adjusted homebuilding gross margin in the same manner that we do. Accordingly, adjusted homebuilding gross margin should be considered only as a supplement to homebuilding gross margin as a measure of our performance. Please see “—Non-GAAP Measures” for a reconciliation of adjusted homebuilding gross margin to homebuilding gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.

Current wording

(6)Adjusted homebuilding gross margin is a non-GAAP financial measure used by management as a supplemental measure in evaluating operating performance. We define homebuilding gross margin excluding inventory impairment as homebuilding gross margin less inventory impairment charges. We define adjusted homebuilding gross margin as homebuilding gross margin excluding inventory impairment, less capitalized interest, and adjustments resulting from the application of purchase accounting included in the cost of sales. Our management believes adjusted homebuilding gross margin is useful because it isolates the impact that capitalized interest, purchase accounting adjustments and inventory impairment have on homebuilding gross margin. However, because adjusted homebuilding gross margin excludes capitalized interest, purchase accounting adjustments and inventory impairment, which have real economic effects and could impact our results, the utility of adjusted homebuilding gross margin as a measure of our operating performance may be limited. In addition, other companies may not calculate adjusted homebuilding gross margin in the same manner that we do. Accordingly, adjusted homebuilding gross margin should be considered only as a supplement to homebuilding gross margin as a measure of our performance. Please see “—Non-GAAP Measures” for a reconciliation of adjusted homebuilding gross margin to homebuilding gross margin, which is the GAAP financial measure that our management believes to be most directly comparable.

Previous wording

(4)EBITDA and adjusted EBITDA are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest amortized to the cost of sales. We define adjusted EBITDA as EBITDA before inventory impairment, stock-based compensation, purchase accounting adjustments, and dead deal costs, as applicable during a period. Our management believes that the presentation of EBITDA and adjusted EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business. EBITDA and adjusted EBITDA provide indicators of general economic performance that are not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, management believes that these measures are useful for comparing general operating performance from period to period. Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of other companies. Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business. EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP. Please see “—Non-GAAP Measures” for reconciliations of EBITDA and adjusted EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable.

Current wording

(7)EBITDA and adjusted EBITDA are non-GAAP financial measures used by management as supplemental measures in evaluating operating performance. We define EBITDA as net income before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization and (iv) capitalized interest amortized to the cost of sales. We define adjusted EBITDA as EBITDA before inventory impairment, stock-based compensation, purchase accounting adjustments, and dead deal costs, as applicable during a period. Our management believes that the presentation of EBITDA and adjusted EBITDA provides useful information to investors regarding our results of operations because it assists both investors and management in analyzing and benchmarking the performance and value of our business. EBITDA and adjusted EBITDA provide indicators of general economic performance that are not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization and items considered to be unusual or non-recurring. Accordingly, management believes that these measures are useful for comparing general operating performance from period to period. Other companies may define these measures differently and, as a result, our measures of EBITDA and adjusted EBITDA may not be directly comparable to the measures of other companies. Although we use EBITDA and adjusted EBITDA as financial measures to assess the performance of our business, the use of these measures is limited because they do not include certain material costs, such as interest and taxes, necessary to operate our business. EBITDA and adjusted EBITDA should be considered in addition to, and not as substitutes for, net income in accordance with GAAP as a measure of performance. Our presentation of EBITDA and adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Our use of EBITDA and adjusted EBITDA is limited as an analytical tool, and you should not consider these measures in isolation or as substitutes for analysis of our results as reported under GAAP. Please see “—Non-GAAP Measures” for reconciliations of EBITDA and adjusted EBITDA to net income, which is the GAAP financial measure that our management believes to be most directly comparable.

Previous wording

Homebuilding Revenues. Homebuilding revenues for the three months ended June 30, 2026 were $501.5 million, an increase of $18.0 million, or 3.7%, from $483.5 million for the three months ended June 30, 2025. The increase in homebuilding revenues was primarily due to a 3.2% increase in the number of homes closed during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The overall increase in home closings was a result of greater wholesale closings during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase in wholesale closings was primarily driven by home deliveries related to a previously contracted bulk sales agreement during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The average sales price per home closed during the three months ended June 30, 2026 was $367,407, an increase of $1,961, or 0.5%, from the average sales price per home closed of $365,446 for the three months ended June 30, 2025. The increase in the average sales price per home closed was primarily due to geographic mix and a decrease in sales incentives, partially offset by a higher volume of wholesale closings and discounted older inventory.

Current wording

Homebuilding Revenues. Homebuilding revenues for the three months ended September 30, 2026 were $437.5 million, an increase of $40.9 million, or 10.3%, from $396.6 million for the three months ended September 30, 2025. The increase in homebuilding revenues was primarily due to an 11.6% increase in the number of homes closed during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The overall increase in home closings was a result of greater wholesale closings during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The increase in wholesale closings was primarily driven by higher demand from our wholesale channel customers during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. The average sales price per home closed during the three months ended September 30, 2026 was $367,962, a decrease of $4,462, or 1.2%, from the average sales price per home closed of $372,424 for the three months ended September 30, 2025. The decrease in the average sales price per home closed was primarily due to geographic mix and discounted older inventory.

Previous wording

Included within our homebuilding revenues for the three months ended June 30, 2026 was $73.5 million in wholesale revenues resulting from 295 home closings, representing 21.6% of the 1,365 total number of homes closed during the three months ended June 30, 2026. Included within our homebuilding 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 number of homes closed during the three months ended June 30, 2025. The increase in home closings as a percentage of revenues through our wholesale channel was primarily related to a previously contracted bulk sales agreement during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Current wording

Included within our homebuilding revenues for the three months ended September 30, 2026 was $80.8 million in wholesale revenues resulting from 215 home closings, representing 18.1% of the 1,189 total number of homes closed during the three months ended September 30, 2026. Wholesale closings exclude previously leased homes. Included within our homebuilding revenues for the three months ended September 30, 2025 was $54.5 million in wholesale revenues resulting from 163 home closings, representing 15.3% of the 1,065 total number of homes closed during the three months ended September 30, 2025. The increase in homebuilding revenue generated by our wholesale channel was primarily related to a higher number of homes delivered related to a large wholesale contract with one of our single-family rental partners during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.

Previous wording

•Homebuilding revenues in our Florida reportable segment increased by $4.8 million, or 7.2%, during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to a 14.7% increase in the number of homes closed, partially offset by a 6.5% decrease in the average sales price per home closed. The increase in home closings was the result of a slightly higher absorption rate.

Current wording

•Homebuilding revenues in our Central reportable segment increased by $4.1 million, or 4.2%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to an 11.4% increase in the number of homes closed, partially offset by a 6.5% decrease in the average sales price per home closed, which included an increase in sales incentives. The increase in home closings was the result of an increase in the average community count.

Previous wording

•Homebuilding revenues in our Southeast reportable segment decreased by $42.0 million, or 28.0%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 29.2% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate.

Current wording

•Homebuilding revenues in our Southeast reportable segment increased by $7.8 million, or 7.7%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to a 12.0% increase in the number of homes closed, partially offset by a 3.9% decrease in the average sales price per home closed, which included an increase in sales incentives. The increase in home closings was the result of a higher absorption rate.

Previous wording

•Homebuilding revenues in our Northwest reportable segment increased by $6.1 million, or 11.4%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 21.0% increase in the number of homes closed, partially offset by a 7.9% decrease in the average sales price per home closed. The increase in home closings was the result of a higher absorption rate and an increase in the average community count.

Current wording

•Homebuilding revenues in our Northwest reportable segment increased by $10.7 million, or 21.7%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to a 5.5% increase in the number of homes closed and a 15.3% increase in the average sales price per home closed, which included an increase in sales incentives. The increase in home closings was the result of an increase in the average community count.

Previous wording

•Homebuilding revenues in our West reportable segment increased by $34.3 million, or 34.2%, during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to a 30.0% increase in the number of homes closed and a 3.2% increase in the average sales price per home closed. The increase in home closings was the result of a higher absorption rate.

Current wording

•Homebuilding revenues in our West reportable segment increased by $16.9 million, or 18.4%, during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, primarily due to a 17.7% increase in the number of homes closed and a 0.6% increase in the average sales price per home closed, which included an increase in sales incentives. The increase in home closings was the result of an increase in the average community count.

Previous wording

Land and Other Revenues. Land and other revenues for the three months ended June 30, 2026 were $14.5 million, an increase of $9.7 million, or 202.1%, from $4.8 million for the three months ended June 30, 2025. The increase in land and other revenues was primarily due to greater lot sales.

Current wording

Land and Other Revenues. Land and other revenues for the three months ended September 30, 2026 were $7.0 million, an increase of $0.1 million, or 1.3%, from $6.9 million for the three months ended September 30, 2025.

Previous wording

Homebuilding Costs and Homebuilding Gross Margin (homebuilding revenues less homebuilding costs). Homebuilding costs for the three months ended June 30, 2026 were $402.1 million, an increase of $29.2 million, or 7.8%, from $372.9 million for the three months ended June 30, 2025. This overall increase was primarily due to a 3.2% increase in the number of homes closed. Homebuilding gross margin for the three months ended June 30, 2026 was $99.4 million, a decrease of $11.2 million, or 10.1%, from $110.6 million for the three months ended June 30, 2025. Homebuilding gross margin as a percentage of homebuilding revenues was 19.8% for the three months ended June 30, 2026 and 22.9% for the three months ended June 30, 2025. The decrease in homebuilding gross margin as a percentage of homebuilding revenues was primarily due to higher lot costs, higher capitalized interest, and higher vertical costs during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Current wording

Homebuilding Costs and Homebuilding Gross Margin (homebuilding revenues less homebuilding costs). Homebuilding costs for the three months ended September 30, 2026 were $349.0 million, an increase of $37.5 million, or 12.0%, from $311.5 million for the three months ended September 30, 2025. This overall increase was primarily due to an 11.6% increase in the number of homes closed. Homebuilding gross margin for the three months ended September 30, 2026 was $88.5 million, an increase of $3.4 million, or 4.0%, from $85.1 million for the three months ended September 30, 2025. Homebuilding gross margin as a percentage of homebuilding revenues was 20.2% for the three months ended September 30, 2026 and 21.5% for the three months ended September 30, 2025. The decrease in homebuilding gross margin as a percentage of homebuilding revenues was primarily due to higher lot costs, higher wholesale closings, higher capitalized interest, and higher vertical costs during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.

Previous wording

Selling Expenses. Selling expenses for the three months ended June 30, 2026 were $44.1 million, an increase of $2.5 million, or 6.0%, from $41.6 million for the three months ended June 30, 2025. The increase in selling expenses was primarily due to an increase in the number of homes closed for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Sales commissions increased to $19.2 million for the three months ended June 30, 2026 from $18.9 million for the three months ended June 30, 2025, primarily due to an increase in the number of homes closed. Selling expenses as a percentage of total revenues were 8.6% and 8.5% for the three months ended June 30, 2026 and 2025, respectively. The increase in selling expenses as a percentage of total revenues was primarily due to higher advertising expenses during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Current wording

Selling Expenses. Selling expenses for the three months ended September 30, 2026 were $35.8 million, an increase of $0.1 million, or 0.3%, from $35.7 million for the three months ended September 30, 2025. The increase in selling expenses was primarily due to an increase in the number of homes closed for the three months ended September 30, 2026 as compared to the three months ended September 30, 2025. Sales commissions increased to $15.8 million for the three months ended September 30, 2026 from $15.2 million for the three months ended September 30, 2025, primarily due to an increase in the number of homes closed. Selling expenses as a percentage of total revenues were 8.0% and 8.8% for the three months ended September 30, 2026 and 2025, respectively. The decrease in selling expenses as a percentage of total revenues was primarily due to higher home closings during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.

Previous wording

General and Administrative. General and administrative expenses for the three months ended June 30, 2026 were $28.6 million, a decrease of $0.8 million, or 2.7%, from $29.4 million for the three months ended June 30, 2025. General and administrative expenses as a percentage of total revenues were 5.5% and 6.0% during the three months ended June 30, 2026 and 2025, respectively. The decrease in general and administrative expenses as a percentage of total revenues was due to higher revenues and lower overall other general and administrative expenses during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Current wording

General and Administrative. General and administrative expenses for the three months ended September 30, 2026 were $26.3 million, a decrease of $1.7 million, or 6.0%, from $28.0 million for the three months ended September 30, 2025. General and administrative expenses as a percentage of total revenues were 5.9% and 6.9% during the three months ended September 30, 2026 and 2025, respectively. The decrease in general and administrative expenses as a percentage of total revenues was primarily due to lower indirect overhead, lower headcount, and lower legal expenses and an increase in total revenues during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025.

Previous wording

Other Income, Net. Other income, net of other expenses for the three months ended June 30, 2026 was $7.6 million, an increase of $4.2 million from $3.4 million for the three months ended June 30, 2025. The increase in other income, net of other expenses, primarily reflects the increase in income associated with our investment in unconsolidated entities and the increase in interest income recognized.

Current wording

Other Income, Net. Other income, net of other expenses for the three months ended September 30, 2026 was $6.2 million, an increase of $3.1 million from $3.1 million for the three months ended September 30, 2025. The increase in other income, net, primarily reflected the increase in income associated with our investment in unconsolidated entities and the increase in interest income recognized.

Previous wording

Net Income before Income Taxes. Net income before income taxes for the three months ended June 30, 2026 was $36.6 million, a decrease of $5.4 million, or 12.9%, from $42.0 million for the three months ended June 30, 2025. The overall decrease in net income before income taxes was primarily due to overall increases in cost of sales related to lot costs, capitalized interest costs, and house costs, offset by an increase in other income, net. Our reportable segments contributed to net income before income taxes during the three months ended June 30, 2026 as follows: Central - $12.8 million, or 35.0%; Southeast - $7.9 million, or 21.6%; Northwest - $1.1 million, or 3.0%; West - $15.2 million, or 41.5%; and Florida - $(1.0) million, or (2.7)%.

Current wording

Net Income before Income Taxes. Net income before income taxes for the three months ended September 30, 2026 was $33.3 million, an increase of $6.6 million, or 24.7%, from $26.7 million for the three months ended September 30, 2025. The overall increase in net income before income taxes was primarily due to an increase in homebuilding gross margin, an increase in other income, net, and a decrease in general and administrative expenses. Our reportable segments contributed to net income before income taxes during the three months ended September 30, 2026 as follows: Central - $8.3 million, or 24.8%; Southeast - $8.7 million, or 26.2%; Northwest - $3.2 million, or 9.6%; West - $11.4 million, or 34.3%; and Florida - $(1.0) million, or (3.0)%.

Previous wording

Income Taxes. Income tax provision for the three months ended June 30, 2026 was $9.6 million, a decrease of $0.9 million, or 8.6%, from income tax provision of $10.5 million for the three months ended June 30, 2025. The decrease in our income tax provision was primarily due to the overall decrease in net income before income taxes. The increase in our effective tax rate to 26.3% for the three months ended June 30, 2026 from 25.0% for the three months ended June 30, 2025 was primarily a result of an increase in the rate for the compensation cost in excess of deductions for share-based payments, state income taxes, net of the federal benefit, and the compensation limitation under Section 162(m) of the Internal Revenue Code, as amended.

Current wording

Income Taxes. Income tax provision for the three months ended September 30, 2026 was $8.8 million, an increase of $1.8 million, or 25.1%, from income tax provision of $7.0 million for the three months ended September 30, 2025. The increase in our income tax provision was primarily due to the overall increase in net income before income taxes. The increase in our effective tax rate to 26.3% for the three months ended September 30, 2026 from 26.2% for the three months ended September 30, 2025 was primarily a result of 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, and other nondeductible expenses.

Previous wording

Net Income. Net income for the three months ended June 30, 2026 was $27.0 million, a decrease of $4.5 million, or 14.3%, from $31.5 million for the three months ended June 30, 2025. The decrease in net income during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 was primarily attributed to overall lower homebuilding gross margin.

Current wording

Net Income. Net income for the three months ended September 30, 2026 was $24.6 million, an increase of $4.9 million, or 24.6%, from $19.7 million for the three months ended September 30, 2025. The increase in net income during the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 was primarily attributed to an increase in homebuilding gross margin, an increase in other income, net, and a decrease in general and administrative expenses.

Previous wording

Our homebuilding 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, 2026 and 2025, and our community count by reportable segment as of June 30, 2026 and 2025, were as follows (revenues in thousands):

Current wording

Our homebuilding revenues, home closings, average sales price per home closed (ASP), average community count and average monthly absorption rate by reportable segment for the nine months ended September 30, 2026 and 2025, and our community count by reportable segment as of September 30, 2026 and 2025, were as follows (revenues in thousands):

Previous wording

Homebuilding Revenues. Homebuilding revenues for the six months ended June 30, 2026 were $821.2 million, a decrease of $13.7 million, or 1.6%, from $834.9 million for the six months ended June 30, 2025. The decrease in homebuilding revenues was primarily due to a decrease in the number of homes closed during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The overall decrease in home closings was a result of a lower average community count, partially offset by a higher average sales price per home closed, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. The overall decrease in average community count related 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, 2026 as compared to the six months ended June 30, 2025. The average sales price per home closed during the six months ended June 30, 2026 was $365,649, an increase of $5,621, or 1.6%, from the average sales price per home closed of $360,028 for the six months ended June 30, 2025. The increase in the average sales price per home closed was primarily due to geographic mix. The absorption rate remained unchanged.

Current wording

Homebuilding Revenues. Homebuilding revenues for the nine months ended September 30, 2026 were $1.3 billion, an increase of $27.2 million, or 2.2%, from $1.2 billion for the nine months ended September 30, 2025. The increase in homebuilding revenues was primarily due to an increase in the number of homes closed during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The overall increase in home closings was a result of a higher average community count during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The overall increase in average community count related to timing associated with new community openings, offset by the close out of some communities and transition between certain active communities during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. The average sales price per home closed during the nine months ended September 30, 2026 was $366,449, an increase of $2,520, or 0.7%, from the average sales price per home closed of $363,929 for the nine months ended September 30, 2025. The increase in the average sales price per home closed was primarily due to geographic mix. The absorption rate remained unchanged.

Previous wording

Included within our homebuilding revenues for the six months ended June 30, 2026 was $103.3 million in wholesale revenues resulting from 423 home closings, representing 18.8% of the 2,246 total number of homes closed during the six months ended June 30, 2026. Included within our homebuilding 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 number of homes closed during the six months ended June 30, 2025. 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 related to a previously contracted bulk sales agreement during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Current wording

Included within our homebuilding revenues for the nine months ended September 30, 2026 was $184.1 million in wholesale revenues resulting from 621 home closings, representing 18.1% of the 3,435 total number of homes closed during the nine months ended September 30, 2026. Included within our homebuilding revenues for the nine months ended September 30, 2025 was $180.4 million in wholesale revenues resulting from 579 home closings, representing 17.1% of the 3,384 total number of homes closed during the nine months ended September 30, 2025. Wholesale closings exclude previously leased homes. The increase in home closings as a percentage of total closings through our wholesale channel was primarily related to higher demand from our wholesale channel customers during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.

Previous wording

•Homebuilding revenues in our Central reportable segment increased by $2.8 million, or 1.3%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 3.6% increase in the number of homes closed, offset by a 2.2% decrease in the average sales price per home closed. The increase in home closings was the result of a higher absorption rate, partially offset by a decrease in the average community count.

Current wording

•Homebuilding revenues in our Central reportable segment increased by $6.9 million, or 2.2%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to a 6.0% increase in the number of homes closed, offset by a 3.6% decrease in the average sales price per home closed, which included an increase in sales incentives. The increase in home closings was the result of an increase in the average community count.

Previous wording

•Homebuilding revenues in our Southeast reportable segment decreased by $71.3 million, or 28.3%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 29.4% decrease in the number of homes closed, partially offset by an increase in the average sales price per home closed. The decrease in home closings was the result of a lower absorption rate and a decrease in the average community count.

Current wording

•Homebuilding revenues in our Southeast reportable segment decreased by $63.5 million, or 18.0%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to a 17.8% decrease in the number of homes closed. The decrease in home closings was the result of a lower absorption rate and a decrease in the average community count.

Previous wording

•Homebuilding revenues in our Northwest reportable segment increased by $8.9 million, or 10.1%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 13.3% increase in the number of homes closed, partially offset by a 2.8% decrease in the average sales price per home closed. The increase in home closings was the result of a higher absorption rate, offset by a decrease in the average community count.

Current wording

•Homebuilding revenues in our Northwest reportable segment increased by $19.6 million, or 14.3%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to a 10.2% increase in the number of homes closed and a 3.7% increase in the average sales price per home closed, which included an increase in sales incentives. The increase in home closings was the result of an increase in the average community count.

Previous wording

•Homebuilding revenues in our West reportable segment increased by $43.2 million, or 25.8%, during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to a 21.1% increase in the number of homes closed and a 3.9% increase in the average sales price per home closed. The increase in home closings was the result of an increase in the average community count and a higher absorption rate.

Current wording

•Homebuilding revenues in our West reportable segment increased by $60.0 million, or 23.2%, during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, primarily due to a 19.9% increase in the number of homes closed and a 2.7% increase in the average sales price per home closed, which included an increase in sales incentives. The increase in home closings was the result of an increase in the average community count and a higher absorption rate.

Previous wording

Land and Other Revenues. Land and other revenues for the six months ended June 30, 2026 were $27.7 million, a decrease of $9.0 million, or 24.5%, from $36.7 million for the six months ended June 30, 2025. The decrease in land and other revenues was primarily due to fewer lot sales.

Current wording

Land and Other Revenues. Land and other revenues for the nine months ended September 30, 2026 were $34.6 million, a decrease of $9.0 million, or 20.6%, from $43.6 million for the nine months ended September 30, 2025. The decrease in land and other revenues was primarily due to fewer lot sales.

Previous wording

Homebuilding Costs and Homebuilding Gross Margin (homebuilding revenues less homebuilding costs). Homebuilding costs for the six months ended June 30, 2026 were $661.9 million, an increase of $11.3 million, or 1.7%, from $650.6 million for the six months ended June 30, 2025. This overall increase was primarily due to higher house costs, higher lot costs, higher capitalized interest and higher indirect overhead. Homebuilding gross margin for the six months ended June 30, 2026 was $159.3 million, a decrease of $25.0 million, or 13.6%, from $184.3 million for the six months ended June 30, 2025. Homebuilding gross margin as a percentage of homebuilding revenues (inclusive of an inventory impairment charge) was 19.4% for the six months ended June 30, 2026 and 22.1% for the six months ended June 30, 2025. The decrease in homebuilding gross margin as a percentage of homebuilding revenues during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 was primarily due to higher lot costs, higher capitalized interest and higher indirect overhead, as well as an inventory impairment charge of $4.7 million, of which $2.4 million was related to our Florida reportable segment and $2.3 million was related to our Central reportable segment.

Current wording

Homebuilding Costs and Homebuilding Gross Margin (homebuilding revenues less homebuilding costs). Homebuilding costs for the nine months ended September 30, 2026 were $1.0 billion, an increase of $48.8 million, or 5.1%, from $962.1 million for the nine months ended September 30, 2025. This overall increase was primarily due to higher house costs, higher lot costs, higher capitalized interest and higher indirect overhead. Homebuilding gross margin for the nine months ended September 30, 2026 was $247.8 million, a decrease of $21.6 million, or 8.0%, from $269.4 million for the nine months ended September 30, 2025. Homebuilding gross margin as a percentage of homebuilding revenues (inclusive of an inventory impairment charge) was 19.7% for the nine months ended September 30, 2026 and 21.9% for the nine months ended September 30, 2025. The decrease in homebuilding gross margin as a percentage of homebuilding revenues during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 was primarily due to higher lot costs, higher capitalized interest and higher indirect overhead, as well as an inventory impairment charge of $4.7 million, of which $2.4 million was related to our Florida reportable segment and $2.3 million was related to our Central reportable segment.

Previous wording

Selling Expenses. Selling expenses for the six months ended June 30, 2026 were $76.8 million, a decrease of $7.1 million, or 8.5%, from $83.9 million for the six months ended June 30, 2025. The decrease in selling expenses was primarily due to a decrease in advertising expenses, personnel costs, and commissions for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025. Sales commissions decreased to $31.7 million during the six months ended June 30, 2026 from $33.0 million for the six months ended June 30, 2025, primarily due to a decrease in homebuilding revenues. Selling expenses as a percentage of total revenues were 9.0% and 9.6% for the six months ended June 30, 2026 and 2025, respectively. The decrease in selling expenses as a percentage of total revenues was primarily due to lower overall expenses, offset by a decrease in total revenues during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Current wording

Selling Expenses. Selling expenses for the nine months ended September 30, 2026 were $112.6 million, a decrease of $7.0 million, or 5.9%, from $119.6 million for the nine months ended September 30, 2025. The decrease in selling expenses was primarily due to a decrease in personnel costs, advertising expenses, and commissions for the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025. Sales commissions decreased to $47.5 million during the nine months ended September 30, 2026 from $48.1 million for the nine months ended September 30, 2025, primarily due to a decrease in external commissions. Selling expenses as a percentage of total revenues were 8.7% and 9.4% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in selling expenses as a percentage of total revenues was primarily due to lower overall expenses and an increase in total revenues during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.

Previous wording

General and Administrative. General and administrative expenses for the six months ended June 30, 2026 were $56.4 million, a decrease of $4.2 million, or 6.9%, from $60.6 million for the six months ended June 30, 2025. The decrease in general and administrative expenses was primarily due to a decrease in other general and administrative expenses and indirect overhead costs, partially offset by an increase in bonuses. General and administrative expenses as a percentage of total revenues were 6.6% and 7.0% for the six months ended June 30, 2026 and 2025, respectively. The decrease in general and administrative expenses as a percentage of total revenues was primarily due to lower overall expenses, offset by a decrease in total revenues during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025.

Current wording

General and Administrative. General and administrative expenses for the nine months ended September 30, 2026 were $82.7 million, a decrease of $5.8 million, or 6.6%, from $88.6 million for the nine months ended September 30, 2025. The decrease in general and administrative expenses was primarily due to a decrease in other general and administrative expenses and indirect overhead costs, partially offset by an increase in bonuses. General and administrative expenses as a percentage of total revenues were 6.4% and 6.9% for the nine months ended September 30, 2026 and 2025, respectively. The decrease in general and administrative expenses as a percentage of total revenues was primarily due to lower overall expenses and an increase in total revenues during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.