Dream Finders Homes, Inc.

Previous wording

We design, build and sell homes primarily in high-growth markets using our asset-light lot acquisition strategy. Our primary focus is on constructing and selling single-family homes across entry-level, first-time move-up, second-time move-up and active adult markets, as well as homes under built-for-rent contracts. To fully serve our homebuyers and capture ancillary business opportunities, we have financial services operations that offer mortgage banking solutions and title insurance—inclusive of agency and underwriting services. Additionally, we offer homeowners insurance and adjacent products to homebuyers

Current wording

We design, build and sell homes primarily in high-growth markets using our asset-light lot acquisition strategy. Our primary focus is on constructing and selling single-family homes across entry-level, first-time move-up, second-time move-up and active adult markets, and we also sell homes to third-party investors that intend to lease the homes (“built-for-rent contracts”). To fully serve our homebuyers and capture ancillary business opportunities, we have financial services operations that offer mortgage banking solutions and title insurance—inclusive of agency and underwriting services. Additionally, we offer homeowners insurance and adjacent products to homebuyers.

Previous wording

(3)EBITDA is a non-GAAP financial measure. For a definition of this non-GAAP financial measure and a reconciliation to our most directly comparable financial measures calculated and presented in accordance with GAAP, see “—Non-GAAP Financial Measures.”

Current wording

(4)EBITDA is a non-GAAP financial measure. For a definition of this non-GAAP financial measure and a reconciliation to our most directly comparable financial measures calculated and presented in accordance with GAAP, see “—Non-GAAP Financial Measures.”

Previous wording

(4)Calculated as a percentage of total revenues.

Current wording

(5)Calculated as a percentage of total revenues.

Previous wording

(5)Return on participating equity is calculated as net income attributable to DFH, less redeemable preferred stock distributions, divided by average beginning and ending total Dream Finders Homes, Inc. stockholders’ equity (“participating equity”) for the trailing twelve months.

Current wording

(6)Return on participating equity is calculated as net income attributable to DFH, less redeemable preferred stock dividends, divided by average beginning and ending total Dream Finders Homes, Inc. stockholders’ equity (“participating equity”) for the trailing twelve months.

Previous wording

The following table sets forth our results of homebuilding operations, other financial data (in thousands, except for percentages) and other operating data for the periods indicated:

Current wording

The following table sets forth our results of homebuilding operations and other financial data (in thousands, except for percentages), as well as other operating data for the periods indicated:

Previous wording

(1)Average sales price of homes closed is calculated based on homebuilding revenues, adjusted for the impact of percentage of completion revenues, and excluding deposit forfeitures and land sales, over homes closed.

Current wording

(1)Average sales price of homes closed is calculated based on homebuilding revenues, adjusted for the impact of percentage of completion revenues, excluding deposit forfeitures and land sales, over homes closed.

Previous wording

(5)A community becomes active once the model is completed or the community has its fifth net sale. A community becomes inactive when it has fewer than five homesites remaining to sell.

Current wording

(6)A community becomes active once the model is completed or the community has its fifth net sale. A community becomes inactive when it has fewer than five homesites remaining to sell.

Previous wording

Homebuilding Cost of Sales and Homebuilding Gross Margin. The lower homebuilding cost of sales was primarily due to the geographical changes in product mix, partially offset by the slight increase in home closings for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024. The decrease in homebuilding gross margin as a percentage of homebuilding revenues when comparing the three months ended September 30, 2025 and 2024 was primarily attributable to the increased use of sales incentives, as well as higher land and financing costs.

Current wording

Homebuilding Gross Margin. The lower homebuilding gross margin was primarily due to the decrease in consolidated ASP of homes closed, as well as the decrease in home closings, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. In addition to the increased use of sales incentives as a percentage of homebuilding revenues, the decrease in homebuilding gross margin as a percentage of homebuilding revenues when comparing the three months ended March 31, 2026 and 2025 was primarily attributable to higher land and financing costs, partially offset by direct cost reductions and cycle-time improvements.

Previous wording

Southeast. Our Southeast segment homebuilding revenues for the three months ended September 30, 2025 were $317 million, an increase of $24 million, or 8%, from $293 million for the three months ended September 30, 2024. This revenue growth was primarily driven by an increase in home closings of 117, or 20%, which was partially offset by a 9% decrease in the ASP of homes closed. Homebuilding gross margin percentage was 18.8% for the three months ended September 30, 2025, representing a decrease of 80 basis points (“bps”), or 4%, when compared to the three months ended September 30, 2024. The decrease in homebuilding gross margin percentage was mostly the result of increased sales incentives, as well as higher land and financing costs, partially offset by direct cost reductions. The Liberty Communities operations in Atlanta (“Liberty Atlanta”) contributed $48 million in homebuilding revenues and 139 home closings with an ASP of $348,231. Liberty Atlanta had a gross margin percentage of 19.6% for the three months ended September 30, 2025.

Current wording

Southeast. Our Southeast segment homebuilding revenues for the three months ended March 31, 2026 were $273 million, a decrease of $35 million, or 11%, from $308 million for the three months ended March 31, 2025. This revenue contraction was primarily driven by a decrease in home closings of 73, or 11%, as well as a 2% decrease in the ASP of homes closed. Homebuilding gross margin percentage was 15.8% for the three months ended March 31, 2026, representing a decrease of 370 bps, or 19%, when compared to the three months ended March 31, 2025. The decrease in homebuilding gross margin percentage was mostly the result of higher land and financing costs, partially offset by direct cost reductions.

Previous wording

Mid-Atlantic. Our Mid-Atlantic segment homebuilding revenues for the three months ended September 30, 2025 were $242 million, a decrease of $42 million, or 15%, from $284 million for the three months ended September 30, 2024. This decline in revenue was driven by a decrease in ASP of $41,409, or 9%, and lower home closings of 33, or 5%. Homebuilding gross margin percentage was 17.1% for the three months ended September 30, 2025, representing a decrease of 320 bps, or 16%, when compared to the three months ended September 30, 2024. The decrease in homebuilding gross margin percentage was mostly the result of increased sales incentives, as well as higher financing and closing costs.

Current wording

Mid-Atlantic. Our Mid-Atlantic segment homebuilding revenues for the three months ended March 31, 2026 were $232 million, a decrease of $6 million, or 3%, from $238 million for the three months ended March 31, 2025. This decline in revenue was primarily driven by a decrease in ASP of homes closed of $74,434, or 16%, and was largely offset by an increase in home closings of 105, or 20%. The reduction in ASP was mostly driven by higher use of sales incentives as a percentage of homebuilding revenues, which increased by 240 bps, or 60%, when compared to the three months ended March 31, 2025, as well as a higher relative and absolute number of built-for-contract closings with lower ASPs. Homebuilding gross margin percentage was 15.6% for the three months ended March 31, 2026, representing a decrease of 600 bps, or 28%, when compared to the three months ended March 31, 2025. The reduction in homebuilding gross margin percentage was mainly due to increased sales incentives and land and financing costs.

Previous wording

Selling, General and Administrative Expense. Selling, general and administrative expense for the homebuilding segments (“SG&A”) as a percentage of homebuilding revenues was 12.0% for the nine months ended September 30, 2025, an increase of 230 bps from 9.7% for the nine months ended September 30, 2024, an increase of $79 million. The dollar and percentage increase in SG&A was primarily attributable to $72 million of spend on forward mortgage commitment programs to allow our homebuyers to access lower mortgage interest rates on home loans, representing a $41 million increase when compared to the nine months ended September 30, 2024. Additionally, for the nine months ended September 30, 2025, SG&A included higher compensation costs of $16 million, largely due to our continued growth, including acquisitions and operational expansions, as well as increased marketing and model home related expenses of $7 million due to increased active community count. As a result of the Liberty acquisition described above, there was SG&A of $18 million in the nine months ended September 30, 2025 that was not included in the nine months ended September 30, 2024.

Current wording

Selling, General and Administrative Expense. The dollar decrease in Homebuilding SG&A was primarily driven by lower compensation cost of $13 million mostly due to reductions commensurate with operational volume and financial results. In addition, the corporate allocation of SG&A attributable to the homebuilding operations decreased by $3 million. The decrease in Homebuilding SG&A was partially offset by a $4 million increase in spend on forward mortgage commitment programs to allow our homebuyers to access lower mortgage interest rates on home loans when compared to the three months ended March 31, 2025. $10 million of the decrease in compensation costs and $2 million of the increase in spend on forward mortgage commitment programs during the three months ended March 31, 2026 were included in our Midwest segment. Homebuilding SG&A as a percentage of homebuilding revenues was 12.5% for the three months ended March 31, 2026, an increase of 50 bps from 12.0% for the three months ended March 31, 2025. The percentage increase in Homebuilding SG&A was primarily attributable to reduced absorption.

Previous wording

Other Expense (Income), Net. The increase in other expense, net for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily due to $7 million of purchase price adjustments related to the Crescent acquisition, which were recognized outside of the measurement period during the first quarter of 2025. Refer to Note 2, Acquisitions to the condensed consolidated financial statements for additional information.

Current wording

Other Expense, Net. The decrease in other expense, net for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily due to $6.7 million of purchase price adjustments related to the February 2024 Crescent Ventures, LLC acquisition, which were recognized outside of the measurement period during the first quarter of 2025.

Previous wording

Income Before Taxes of Homebuilding Operations. The decrease in income before taxes of homebuilding operations during the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily attributable to the reduction in homebuilding revenues and gross margin and, to a lesser extent, the increases in SG&A, all of which are explained above.

Current wording

Income Before Taxes Of Homebuilding Operations. The decrease in income before taxes of homebuilding operations during the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily attributable to the reduction in homebuilding revenues, gross margin and Homebuilding SG&A as a percentage of homebuilding revenues, all of which are explained above.

Previous wording

We employ an asset-light and cost-effective lot acquisition strategy to achieve our growth goals. This strategy involves two key approaches: finished lot option contracts and land bank option contracts. These option contracts generally allow us, at our option, to forfeit our right to purchase the lots controlled for any reason, and our sole legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid pursuant to such option contracts and in the case of land bank option contracts, our loss is limited to the related lot option fees paid to the land bank partner, and for certain land bank option contracts, any potential performance obligations, management of the land development to completion and any cost overruns relative to the project. We provide lot deposits typically averaging 10% of the land purchase price.

Current wording

We employ an asset-light lot acquisition strategy to achieve our growth goals. This strategy involves two key approaches: finished lot option contracts and land bank option contracts. These option contracts generally allow us, at our option, to forfeit our right to purchase the lots controlled for any reason, and our legal obligation and economic loss as a result of such forfeitures is limited to the amount of the deposits paid and, where applicable, termination fees pursuant to such option contracts and, in the case of land bank option contracts, our loss is limited to the related lot option fees paid to the land bank partner and, for certain land bank option contracts, any potential performance obligations, management of the land development to completion and any cost overruns relative to the project. We provide lot deposits typically averaging 10% of the land purchase price. Lot option fees are based on the outstanding capital balance held by the land banker, and as such, delays in land development and/or longer finished lot takedown periods result in additional costs.

Previous wording

As of September 30, 2025 and December 31, 2024, our lot deposits for finished lot option and land bank option contracts were $551 million and $458 million, respectively. As of September 30, 2025 and December 31, 2024, we controlled 64,341 and 54,698 lots, respectively, under finished lot option and land bank option contracts.

Current wording

As of March 31, 2026 and December 31, 2025, our lot deposits for finished lot option and land bank option contracts were $534 million and $545 million, respectively. As of March 31, 2026 and December 31, 2025, we controlled 60,629 and 63,121 lots under finished lot option and land bank option contracts, respectively. The risk of loss related to finished lot and land bank option deposits and related fees was $792.6 million and $773.4 million as of March 31, 2026 and December 31, 2025, respectively. Risk of loss includes the lot deposits noted above, which are reported as such on the condensed consolidated balance sheet, pre-acquisition land costs, which include due diligence costs, lot option fees and property taxes, which are included in inventories on the condensed consolidated balance sheet, and any applicable termination fees.

Previous wording

(1)See Note 8, Segment Reporting to the condensed consolidated financial statements for further explanation of our reportable segments.

Current wording

(1)Refer to Note 8, Segment Reporting to our condensed consolidated financial statements for further explanation of our reportable segments.

Previous wording

(2)As of September 30, 2025 and December 31, 2024, we had 820 and 603 controlled lots under built-for-rent contracts, respectively.

Current wording

(2)As of March 31, 2026 and December 31, 2025, we had 252 and 731 controlled lots under built-for-rent contracts, respectively.

Previous wording

A community becomes active once the model is completed or the community has its fifth net sale. A community becomes inactive when it has fewer than five units remaining to sell. Active community count is an important metric to forecast future net sales for our business. As of September 30, 2025, we had 283 active communities, an increase of 48 communities, or 20%, as compared to 235 active communities as of September 30, 2024.

Current wording

A community becomes active once the model is completed or the community has its fifth net sale. A community becomes inactive when it has fewer than five units remaining to sell. Ending active community count is an important metric to forecast future net sales for our business. As of March 31, 2026, we had 332 active communities, an increase of 74 communities, or 29%, as compared to 258 active communities as of March 31, 2025. As of March 31, 2026, the Company had 1,347 completed quick move-in ready homes, which represents approximately 4 spec homes per ending active community.

Previous wording

Our active community count excludes communities under the built-for-rent contracts, as all sales to third-party investors occur at one point in time and these communities would have no homesites remaining to sell. As of September 30, 2025, we had 12 communities delivering closings under built-for-rent contracts, as compared to 13 communities as of September 30, 2024.

Current wording

Our active community count excludes communities under built-for-rent contracts, as all sales to third-party investors occur at one point in time and these communities would have no homesites remaining to sell. As of March 31, 2026, we had 12 communities delivering closings under built-for-rent contracts, as compared to 5 communities as of March 31, 2025.

Previous wording

Our homebuilding cost of sales includes the acquisition and finance costs of homesites or lots, municipality fees, the costs associated with obtaining building permits, materials and labor to construct the home, interest costs for construction loans, internal and external realtor commissions and other miscellaneous closing costs. Homesite costs range from 30-35% of the average cost of a home. Building materials range from 30-35% of the average cost to build the home, labor ranges from 20-25% of the average cost to build the home, and interest, commissions and closing costs range from 5-10% of the average cost to build the home.

Current wording

Our homebuilding cost of sales includes the acquisition and finance costs of homesites or lots, municipality fees, the costs associated with obtaining building permits, materials and labor to construct the home, financing costs on our homebuilding related debt, internal and external realtor commissions and other miscellaneous closing costs. Homesite costs typically range from 30-35% of the average cost of a home. Building materials typically range from 30-35% of the average cost to build the home, labor typically ranges from 20-25% of the average cost to build the home, and interest, commissions and closing costs typically range from 5-10% of the average cost to build the home.

Previous wording

Our materials are subject to price fluctuations. Once construction of a home begins, prices for the materials utilized in the construction of that particular home are generally locked via purchase orders, but fluctuations may occur as a result of market conditions. Price fluctuations may be caused by several factors, including seasonal variation in availability of materials, labor and supply chain disruptions, international trade disputes and resulting tariffs, and changes in demand for materials as a result of the housing market conditions where we operate. The price changes that most significantly influence our operations are price increases in commodities. Significant price increases of these materials may negatively impact our homebuilding cost of sales and, in turn, our net income.

Current wording

Our materials are subject to price fluctuations. Once construction of a home begins, prices for the materials and labor utilized in the construction of that particular home are generally locked via purchase orders, but fluctuations may occur as a result of market conditions. Price fluctuations may be caused by several factors, including seasonal variation in availability of materials, labor and supply chain disruptions, fluctuations in oil prices influencing transportation, energy and manufacturing costs, international trade disputes and resulting tariffs, and changes in demand for materials as a result of the housing market conditions where we operate. The price changes that most significantly influence our operations are price increases in commodities and labor availability.

Previous wording

A sale is reported when a customer has received preliminary mortgage approval and the sales contract has been signed by the customer, approved by us and secured by a deposit. These deposits are typically nonrefundable, but each customer situation is evaluated individually. Sales to third-party investors that intend to lease the homes (“built-for-rent contracts”) are reported when we have received a nonrefundable deposit.

Current wording

A sale is reported when a customer has received preliminary mortgage approval and the sales contract has been signed by the customer, approved by us and secured by a deposit. These deposits are typically nonrefundable, but each customer situation is evaluated individually. Sales under built-for-rent contracts are reported when we have received a nonrefundable deposit.

Previous wording

Net sales are sales of homes during the period less cancellations of existing sales contracts during the period. Our cancellation rate for a given period is calculated as the total number of sales contracts cancelled during the period, divided by the total number of new sales contracts entered into during the period. Cancellations can occur for various reasons outside of our control, including customer credit issues or changes in other personal circumstances.

Current wording

Net sales are sales of homes during the period less cancellations of existing sales contracts during the period. Our cancellation rate for a given period is calculated as the total number of cancellations during the period, divided by the total number of gross sales contracts entered into during the period. Cancellations can occur for various reasons outside of our control, including customer credit issues or changes in other personal circumstances.

Previous wording

The following table presents information concerning our net sales, starts and closings in each of our homebuilding segments for the three and nine months ended September 30, 2025 and 2024:

Current wording

The following table presents information concerning our net sales, starts and closings in each of our homebuilding segments for the three months ended March 31, 2026 and 2025:

Previous wording

Backlog of sold homes as of September 30, 2025 was 2,619 homes valued at approximately $1.2 billion based on ASP, a decrease of 1,377 homes and $0.8 billion in value, or 34% and 42%, respectively, from 3,996 homes valued at approximately $2.0 billion as of September 30, 2024. The overall decrease in backlog was reflective of a constrained sales environment as well as a continued trend toward move-in ready spec homes relative to pre-order sales and, to a lesser extent, fewer built-for-rent contracts in backlog. Spec homes typically result in quicker closings and turnover of the backlog within the same reporting period. Approximately 1,179 of the homes in our backlog are expected to be delivered in 2026 and beyond.

Current wording

Backlog of sold homes as of March 31, 2026 was 2,377 homes valued at approximately $1.1 billion based on ASP, a decrease of 425 homes and $0.3 billion in value, or 15% and 20%, respectively, from 2,802 homes valued at approximately $1.4 billion as of March 31, 2025. Approximately 106 of the homes in our backlog are expected to be delivered in 2027 and beyond. The overall decrease in backlog was reflective of a continued constrained sales environment, despite an increase in net sales in the current period, as well as a continued trend toward move-in ready spec homes relative to pre-order sales and, to a lesser extent, fewer built-for-rent contracts in backlog. Spec homes typically result in quicker closings and turnover of the backlog within the same reporting period.

Previous wording

Southeast. Backlog for the Southeast segment as of September 30, 2025 was 1,143 homes, a decrease of 502 from 1,645 homes as of September 30, 2024. The decrease from prior year was primarily attributable to a continued trend toward more sales of move-in-ready spec homes relative to pre-order sales and, to a lesser extent, fewer built-for-rent contracts in ending backlog.

Current wording

Southeast. Backlog for the Southeast segment as of March 31, 2026 was 1,037 homes, a decrease of 193 from 1,230 homes as of March 31, 2025. The decrease from prior year was primarily attributable to fewer built-for-rent contracts in backlog, as existing contracts were delivered.

Previous wording

Midwest. Backlog for the Midwest segment as of September 30, 2025 was 578 homes, a decrease of 664 from 1,242 homes as of September 30, 2024. The decrease from prior year was mostly a result of higher closings relative to net sales, as well as the continued trend toward more sales of move-in-ready spec homes relative to pre-order sales. Lower net sales in the Midwest segment were primarily the result of weakening Dallas and Austin, Texas markets.

Current wording

Midwest. Backlog for the Midwest segment as of March 31, 2026 was 562 homes, a decrease of 292 from 854 homes as of March 31, 2025. The decrease from prior year was mostly a result of the continued constrained sales environment, slightly offset by higher net sales relative to closings.

Previous wording

(1)Our cancellation rate for a given period is calculated as the total number of new sales contracts cancelled during the period, divided by the total number of new home sales contracts entered into during the period.

Current wording

(1)Our cancellation rate for a given period is calculated as the total number of sales contracts cancelled during the period, divided by the total number of new home sales contracts entered into during the period.

Previous wording

The following tables present selected financial information and supplemental data for our Financial Services segment for the three and nine months ended September 30, 2025 and 2024 (dollars in thousands, unless otherwise indicated):

Current wording

The following table presents selected financial information and supplemental data for our Financial Services segment for the three months ended March 31, 2026 and 2025 (dollars in thousands, unless otherwise indicated):

Previous wording

(2)Includes interest charged to homebuilding cost of sales related to our homebuilding debt, as well as lot option fees.

Current wording

(1)Includes interest charged to homebuilding cost of sales related to our Senior Notes and Credit Agreement, as well as lot option fees.

Previous wording

(1)Includes interest charged to homebuilding cost of sales related to our Senior Notes and Credit Agreement and other homebuilding notes payable included within revolving credit facility and other borrowings on the Condensed Consolidated Balance Sheets (“homebuilding debt”), as well as lot option fees.

Current wording

(2)Includes interest charged to homebuilding cost of sales related to our senior unsecured notes, net, revolving credit facility and other homebuilding-related debt (“homebuilding debt”), as well as lot option fees.

Previous wording

Net homebuilding debt to net capitalization is a non-GAAP financial measure calculated as homebuilding debt, less cash and cash equivalents (“net homebuilding debt”), divided by the sum of net homebuilding debt, total mezzanine equity and total equity (“net capitalization”). Net homebuilding debt excludes borrowings under our mortgage warehouse facilities, as well as any other non-homebuilding borrowings the Company may incur from time to time. Management believes the ratio of net homebuilding debt to net capitalization is meaningful as it is used to assess the performance of our homebuilding segments, as well as to establish targets for performance-based compensation. We also use this ratio as a measure of overall leverage.

Current wording

Net homebuilding debt to net capitalization is a non-GAAP financial measure calculated as homebuilding debt, less cash and cash equivalents (“net homebuilding debt”), divided by the sum of net homebuilding debt, total mezzanine equity and total equity (“net capitalization”). Net homebuilding debt excludes borrowings under our mortgage warehouse facilities, as well as any other non-homebuilding borrowings the Company may incur from time to time. Management believes the ratio of net homebuilding debt to net capitalization is meaningful as it is used to assess the performance of our homebuilding segments and is a relevant measure of our overall leverage.

Previous wording

Our principal uses of capital are for lot deposits, lot purchases just-in-time for construction, vertical home construction, operating expenses, the payment of routine liabilities, business acquisitions and the origination of mortgage loans. Total cash consideration as of September 30, 2025 and 2024 for business acquisitions closed during the nine months ended September 30, 2025 and 2024 was $191 million and $201 million, respectively. Refer to Note 2, Acquisitions to the condensed consolidated financial statements for more information.

Current wording

Our principal uses of capital are for lot deposits, lot purchases just-in-time for construction, vertical home construction, operating expenses, the payment of routine liabilities, business acquisitions and the origination of mortgage loans. There were no cash payments for business acquisitions during the three months ended March 31, 2026, and there were cash payments of $112 million for business acquisitions during the three months ended March 31, 2025. Refer to Note 1, Nature of Business and Significant Accounting Policies to the consolidated financial statements within our Annual Report on Form 10-K for the year ended December 31, 2025, for more information.

Previous wording

Cash flows generated by our homebuilding projects can differ materially from our results of operations, as these depend upon the stage in the life cycle of each project. The majority of our projects begin at the land acquisition and development stage when we enter into finished lot option and land bank option contracts by placing a deposit with a land seller, developer or land banker. Our lot deposits are an asset on our Condensed Consolidated Balance Sheets. Early stages in our communities require material cash outflows relating to finished lot purchases from option contracts, entitlements and permitting, construction and furnishing of model homes, roads, utilities, general landscaping and other amenities, as well as ongoing association fees and property taxes. Except for furnishings of model homes, these costs are capitalized within our inventories and are not recognized as an expense until a home sale closes. As such, we incur significant cash outflows prior to the recognition of revenues and the related cost of sales.

Current wording

Cash flows generated by our homebuilding projects can differ materially from our results of operations, as these depend upon the stage in the life cycle of each project. The majority of our projects begin at the land acquisition and development stage when we enter into finished lot option and land bank option contracts by placing a deposit with a land seller, developer or land banker. Our lot deposits are an asset on our Condensed Consolidated Balance Sheets. Early stages in our communities require material cash outflows relating to finished lot purchases from option contracts, permitting, construction and furnishing of model homes, roads, utilities, general landscaping and other amenities, as well as ongoing association fees and property taxes. Except for furnishings of model homes, these costs are capitalized within our inventories and are not recognized as an expense until a home sale closes. As such, we incur significant cash outflows prior to the recognition of revenues and the related cost of sales.

Previous wording

Our lot deposits are generally 100% applicable to the lot purchase price. In these transactions, we also incur lot option fees on the outstanding capital balance held by the land banker. The initial investment and lot option fees require us to have the ability to allocate liquidity resources to projects that will not generate cash inflows or operating income in the near term.

Current wording

Our lot deposits are generally 100% applicable to the lot purchase price. In land bank transactions, we also incur lot option fees on the outstanding capital balance held by the land banker and may also incur termination fees, where applicable. The initial investment and lot option fees require us to have the ability to allocate liquidity resources to projects that will not generate cash inflows or operating income in the near term.

Previous wording

The above cash and land-light strategies allow us to maintain an adequate lot supply in our existing markets and support ongoing growth and profitability. We continue to operate in geographic regions with consistent increases in demand for new homes and constrained lot and inventory supply compared to population and job growth trends. We intend to continue to reinvest our earnings into our business and focus on expanding our operations. In addition, as the opportunity to purchase finished lots in desired locations becomes increasingly more limited and competitive, we are committed to allocating additional liquidity to land bank deposits on land development projects, as this strategy mitigates the risks associated with holding undeveloped land on our balance sheet, while allowing us to control adequate lot supply in our key markets to support forecasted growth. As of September 30, 2025 and December 31, 2024, our lot deposits related to finished lot option contracts and land bank option contracts were $551 million and $458 million, respectively.

Current wording

The above cash and land-light strategies allow us to maintain an adequate lot supply in our existing markets and support ongoing growth and profitability while significantly de-risking our balance sheet. We continue to operate in geographic regions with consistent increases in demand for new homes and constrained lot and inventory supply compared to population and job growth trends. We intend to continue to reinvest our earnings into our business and focus on expanding our operations. In addition, as the opportunity to purchase finished lots in desired locations becomes increasingly more limited and competitive, we are committed to allocating additional liquidity to land bank deposits on land development projects, as this strategy mitigates the risks associated with holding undeveloped land on our balance sheet, while allowing us to control adequate lot supply in our key markets to support forecasted growth. As of March 31, 2026 and December 31, 2025, our lot deposits related to finished lot option contracts and land bank option contracts were $534 million and $545 million, respectively.

Previous wording

As of September 30, 2025 and December 31, 2024, our cash and total liquidity were as follows (in thousands):

Current wording

As of March 31, 2026 and December 31, 2025, our total liquidity was as follows (in thousands):

Previous wording

(1)As of September 30, 2025 and December 31, 2024, the borrowing base under the Credit Agreement is reduced by the principal amount of the Senior Notes of $600 million and $300 million, respectively. As of September 30, 2025, the borrowing base calculation included available cash and escrow receivables in excess of $25 million. Refer to Note 3, Debt for additional information.

Current wording

(1)As of March 31, 2026 and December 31, 2025, the borrowing base under the Credit Agreement is reduced by the principal amount of the Senior Notes of $600 million. As of March 31, 2026, the borrowing base calculation included available cash and escrow receivables in excess of $25 million. Refer to Note 3, Debt to our condensed consolidated financial statements for additional information.

Previous wording

Certain of our subsidiaries guaranteed the Company’s obligations under the Credit Agreement and the Senior Notes. As of September 30, 2025, we were in compliance with the covenants set forth for all of our debt obligations. Refer to Note 3, Debt, to the condensed consolidated financial statements for more information on the Credit Agreement, Senior Notes and the mortgage warehouse facilities.

Current wording

Obligations under the Credit Agreement and Senior Notes are fully and unconditionally guaranteed on a joint and several basis by certain of the Company’s subsidiaries. As of March 31, 2026, we were in compliance with the covenants set forth for all of our debt obligations. Refer to Note 3, Debt to our condensed consolidated financial statements for more information on the Credit Agreement, Senior Notes and the mortgage warehouse facilities.

Previous wording

Net cash used in operating activities was $244 million for the nine months ended September 30, 2025, compared to $563 million of net cash used in operating activities for the nine months ended September 30, 2024. The change in net cash used in operating activities was primarily driven by a $189 million decrease of mortgage loans held for sale from the beginning of the current period and lower increases in inventories of $171 million when compared to the prior year period, mostly as a result of higher volume of closings and fewer home starts. The change in net cash used in operating activities are net of the effects of the Crescent Homes, Liberty Communities, Alliant Title and Green River Builders acquisitions.

Current wording

Net cash used in operating activities was relatively consistent at $50 million for the three months ended March 31, 2026, compared to $45 million of net cash used in operating activities for the three months ended March 31, 2025. The slight change in net cash used in operating activities was mostly due to the decrease in net income of $41 million, increased spend on inventories of $54 million and the reduction of $58 million in mortgage loans held for sale from the beginning of the current period, compared to a reduction of $114 million in the prior year. These increases in net cash used in operating activities were mostly offset by $64 million from reduced expenditures on lot deposits, increased customer deposits of $39 million from increased sales activity and a smaller reduction in accounts payable and accrued expenses of $34 million. The change in net cash used in operating activities are net of the effects of the Liberty Communities acquisition.