Dream Finders Homes Inc

Previous wording

We are aware of the persistent inflationary conditions that remain at elevated levels. Consequently, the country expects less interest rate cuts in 2024 than were previously anticipated, and a significant decline in mortgage interest rates in 2024 is less likely now. Our asset-light strategy allows us to remain nimble in this inflationary environment, as we can strategically renegotiate lot option takedowns to match sales pace, allowing us to safeguard our financial position while also delivering favorable returns on stockholders’ equity.

Current wording

We acknowledge the persistent inflationary conditions; there have been no interest rate cuts in 2024 thus far, and the timing of a substantial decrease in mortgage interest rates is uncertain. Our asset-light strategy allows us to remain nimble in this environment, as we can strategically renegotiate lot option takedowns to match our sales pace.

Previous wording

Our current strategy for selling homes remains the same: delivering affordable, quick move-in homes and providing flexible sales incentives aimed at reducing monthly mortgage payments and closing costs for homebuyers. This strategy continues to prove successful in generating sales and improving our backlog conversion rate. We are committed to ongoing improvements in inventory turnover and effective cost management. Furthermore, our close monitoring of net new orders and community-level traffic enables us to promptly adapt to changes in local market conditions as necessary.

Current wording

Our current strategy for selling homes remains the same: delivering affordable, quick move-in homes and providing flexible sales incentives aimed at reducing monthly mortgage payments and closing costs for homebuyers. This strategy continues to prove successful in generating sales and improving our backlog conversion rate. With the acquisition of our preferred mortgage lender, Jet HomeLoans, discussed below, we are excited about the ability to directly manage our mortgage initiatives. We are committed to ongoing improvements in inventory turnover and effective cost management. Furthermore, our close monitoring of net new orders and community-level traffic enables us to promptly adapt to changes in local market conditions as necessary.

Previous wording

•Average sales price (“ASP”) of homes closed increased to $494,995 from $490,553

Current wording

•Average sales price (“ASP”) of homes closed increased to $514,833 from $504,683

Previous wording

•Basic earnings per share (“EPS”) was $0.55 and diluted EPS was $0.55, compared to $0.49 and $0.45, respectively

Current wording

•Basic earnings per share (“EPS”) increased to $0.83 and diluted EPS increased to $0.81, compared to $0.70 and $0.65, respectively

Previous wording

•Backlog of sold homes decreased 17% to 4,524 from 5,479, and the value of backlog decreased 8% to $2.3 billion from $2.5 billion

Current wording

•Backlog of sold homes decreased 20% to 4,205 from 5,288, and the value of backlog decreased 15% to $2.1 billion from $2.5 billion

Previous wording

•Return on participating equity was 34.9% for the trailing twelve months ended March 31, 2024, compared to 46.0% for the trailing twelve months ended March 31, 2023

Current wording

•Return on participating equity was 33.5% for the trailing twelve months ended June 30, 2024, compared to 42.2% for the trailing twelve months ended June 30, 2023

Previous wording

•Net debt to net capitalization of 39.9% as of March 31, 2024, compared to 43.3% as of March 31, 2023

Current wording

•Net debt to net capitalization of 42.7% as of June 30, 2024, compared to 38.8% as of June 30, 2023

Previous wording

•Total liquidity, comprised of cash and cash equivalents, and availability under the revolving credit facility, of $500 million as of March 31, 2024, compared to $828 million as of December 31, 2023

Current wording

•Total liquidity, comprised of cash and cash equivalents, and availability under the revolving credit facility, of $475 million as of June 30, 2024, compared to $828 million as of December 31, 2023

Previous wording

•Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased 200 bps to 26.3% from 24.3%

Current wording

•Adjusted gross margin (non-GAAP) as a percentage of homebuilding revenues increased 90 basis pointsto 26.7% from 25.8%

Previous wording

Revenues. Revenues for the three months ended March 31, 2024 were $828 million, an increase of $59 million, or 8%, from $769 million for the three months ended March 31, 2023. The increase in revenues was primarily attributable to 1,655 home closings for the three months ended March 31, 2024, an increase of 138 homes, or 9%, from the 1,517 home closings for the three months ended March 31, 2023. Of the 138 additional home closings, 111 homes with an ASP of $428,818 were contributed by the Crescent Homes acquisition. The consolidated ASP of homes closed for the three months ended March 31, 2024 was $494,995, a slight increase from an ASP of $490,553 for the three months ended March 31, 2023. Excluding Crescent Homes, 38% of our closings were in the Midwest segment, which had an ASP of $574,359, which is higher relative to our other homebuilding segments.

Current wording

Revenues. The increase in revenues was primarily attributable to 2,031 home closings for the three months ended June 30, 2024, an increase of 185 homes, or 10%, from 1,846 home closings for the three months ended June 30, 2023. Of the additional home closings, 162 homes with an ASP of $488,485 were contributed by the Crescent Homes acquisition. The consolidated ASP of homes closed increased 2% when comparing the three months ended June 30, 2024 to the three months ended June 30, 2023. Excluding Crescent Homes, 40% of our closings were in the Midwest segment with an ASP of $585,971, which is higher relative to our other homebuilding segments.

Previous wording

Homebuilding Cost of Sales and Gross Margin. Homebuilding cost of sales for the three months ended March 31, 2024 was $679 million, an increase of $42 million, or 6%, from $637 million for the three months ended March 31, 2023. The increase in homebuilding cost of sales was primarily due to the increase in home closings for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. Homebuilding gross margin for the three months ended March 31, 2024 was $147 million, an increase of $17 million, or 13%, from $130 million for the three months ended March 31, 2023. Homebuilding gross margin as a percentage of homebuilding revenues was 17.8% for the three months ended March 31, 2024, an increase of 80 bps, or 5%, from 17.0% for the three months ended March 31, 2023. The increase in gross margin percentage was primarily attributable to direct cost reductions and, to a lesser extent, cycle time improvements across our homebuilding operations. The increase in gross margin percentage was partially offset by higher land and financing costs. In addition, amortization of purchase accounting adjustments associated with home closings contributed from the Crescent Homes acquisition negatively impacted the first quarter of 2024 gross margin percentage by approximately 50 bps. Purchase accounting amortization is a temporary cost that will conclude in conjunction with closing the remaining homes in inventory acquired from Crescent.

Current wording

Homebuilding Cost of Sales and Gross Margin. The higher homebuilding cost of sales and homebuilding gross margin were primarily due to the increase in home closings for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The consistent homebuilding gross margin as a percentage of homebuilding revenues when comparing the three months ended June 30, 2024 and 2023 was primarily attributable to direct cost reductions and, to a lesser extent, improvements in cycle time, partially offset by higher land and financing costs. In addition, amortization of purchase accounting adjustments associated with home closings contributed from the Crescent Homes acquisition negatively impacted the second quarter of 2024 gross margin percentage by approximately 20 basis points (“bps”). Purchase accounting amortization is a temporary cost that will conclude in conjunction with closing the remaining homes in inventory acquired from Crescent.

Previous wording

Income from Unconsolidated Entities. Income from unconsolidated entities for the three months ended March 31, 2024 was $5 million, an increase of $2 million, or 66%, from $3 million for the three months ended March 31, 2023, primarily attributable to higher income from Jet HomeLoans.

Current wording

Income from Unconsolidated Entities. Income from unconsolidated entities for the three months ended June 30, 2024 was $5 million, remaining consistent compared to $5 million for the three months ended June 30, 2023.

Previous wording

Contingent Consideration Revaluation. Contingent consideration revaluation expense for the three months ended March 31, 2024 was $3 million, a decrease of $2 million, or 40%, from $5 million for the three months ended March 31, 2023. The decrease in contingent consideration expense in the first quarter of 2024 was primarily due to lower fair value adjustments of future expected earnout payments from the MHI and H&H acquisitions and, to a lesser extent, the earnout period of our VPH acquisition, which ended in the first quarter of 2023.

Current wording

Contingent Consideration Revaluation. The decrease in contingent consideration expense in the second quarter of 2024 was primarily due to lower fair value adjustments of future expected earnout payments when compared to the second quarter of 2023, primarily related to the MHI acquisition.

Previous wording

The following table presents income before taxes (in thousands), and homebuilding gross margin percentage by segment for the three months ended March 31, 2024 and 2023:

Current wording

The following table presents income before taxes (in thousands) and homebuilding gross margin percentage by segment for the six months ended June 30, 2024 and 2023:

Previous wording

Southeast. Our Southeast segment total revenues for thethree months ended March 31, 2024 were$280 million, a decrease of $27 million, or 9%, from $307 million for the three months ended March 31, 2023. This decline in revenue was primarily driven by a decrease in home closings of 56, or 9%, which was partially offset by a 5% increase in the ASP of homes closed of $473,608 for the three months ended March 31, 2024 when compared to the three months ended March 31, 2023. Homebuilding gross margin percentage was 17.9% for the three months ended March 31, 2024, representing an increase of 190 bps, or 12%, when compared to the three months ended March 31, 2023. The increase in gross margin percentage was primarily attributed to direct cost reductions and, to a lesser extent, cycle time improvements, partially offset by higher land and financing costs.

Current wording

Southeast. Our Southeast segment total revenues for the six months ended June 30, 2024 were $621 million, a decrease of $60 million, or 9%, from $681 million for the six months ended June 30, 2023. This decline in revenue was primarily driven by a decrease in home closings of 187, or 13%, partially offset by a 8% increase in the ASP of homes closed. Homebuilding gross margin percentage was 19.4% for the six months ended June 30, 2024, representing an increase of 270 bps, or 16%, when compared to the six months ended June 30, 2023. The increase in gross margin percentage was mostly the result of direct cost reductions and, to a lesser extent, cycle time improvements, partially offset by higher land and financing costs.

Previous wording

Midwest. Our Midwest segment total revenues for the three months ended March 31, 2024 were$335 million, an increase of $4 million, or 1%, from $331 million for the three months ended March 31, 2023. This increase was due to higher home closings of 73, or 14%, partially offset by a decrease of 9% in the ASP of homes closed. ASP of homes closed was $574,359 for the three months ended March 31, 2024 when compared to $631,224 for the three months March 31, 2023. Homebuilding gross margin percentage was 17.5% for the three months ended March 31, 2024, representing a decrease of 160 bps, or 8%, when compared to thethree months ended March 31, 2023. The reduction in gross margin percentage this quarter compared to the prior year quarter was due to an increase in land costs and, to a lesser extent, higher financing and closing costs, partially offset by direct cost reductions.

Current wording

Midwest. Our Midwest segment total revenues for the six months ended June 30, 2024 were $782 million, an increase of $35 million, or 5%, from $747 million for the six months ended June 30, 2023. This increase was due to higher home closings of 165, or 14%, partially offset by a decrease of 8% in the ASP of homes closed. The decrease in ASP of homes closed was due to changes in the geographic mix of closings within the segment. Homebuilding gross margin percentage was 17.8% for the six months ended June 30, 2024, representing a decrease of 220 bps, or 11%, when compared to six months ended June 30, 2023. The reduction in gross margin percentage was due to an increase in land costs and, to a lesser extent, higher financing costs, partially offset by direct cost reductions.

Previous wording

Selling, General and Administrative Expense. Selling, general and administrative expense (“SG&A”) for the three months ended March 31, 2024 was $82 million, an increase of $21 million, or 35%, from $61 million for the three months ended March 31, 2023. SG&A as a percentage of homebuilding revenues was 9.9% in the first quarter of 2024, an increase of 200 bps compared to 7.9% for the first quarter of 2023. The increase in SG&A was primarily attributable to higher compensation costs of $15 million associated with increased headcount due to our growth, including the recent acquisition of Crescent Homes, and stock awards. Additionally, for the first quarter of 2024, SG&A included $7 million of spend in relation to forward mortgage commitment programs to allow our homebuyers to lock in their interest rates on home loans at the point of sale compared with $4 million for the first quarter of 2023. We expense these costs as incurred.

Current wording

Selling, General and Administrative Expense. The increases in SG&A and in SG&A as a percentage of homebuilding revenues were primarily due to higher compensation costs of $27 million due to our growth, including the recent acquisition of Crescent Homes. Additionally, for the six months ended June 30, 2024, SG&A included $16 million of spend on forward commitment programs to allow our homebuyers to access lower interest rates on home loans at the point of sale, $8 million higher when compared to the six months ended June 30, 2023.

Previous wording

Other (Income) Expense, Net. Other income, net for the three months ended March 31, 2024 was $2 million, an increase of $2 million when compared to the three months ended March 31, 2023. The additional income was primarily due to increased interest income from our cash deposits with financial institutions.

Current wording

Other (Income) Expense, Net. The increase in other income, net was primarily due to increased interest income from our cash deposits with financial institutions.

Previous wording

Net and Comprehensive Income. Net and comprehensive income for the three months ended March 31, 2024 was $56 million, an increase of $4 million, or 8%, from $52 million for the three months ended March 31, 2023. The change in net and comprehensive income was primarily attributable to an increase in gross margin on home closings of $16 million during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The effective tax rate decreased by 4% during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, which also contributed to the increase in net and comprehensive income. The decrease in effective tax rate was primarily attributable to increased windfall tax benefits from stock-based compensation, as well as a higher number of home closings expected to qualify for the 45L tax credit in the current year compared to the prior year. The changes in net and comprehensive income attributable to Dream Finders Homes, Inc. are consistent with the changes in net and comprehensive income as there was no significant change in noncontrolling interests for the period.

Current wording

Net and Comprehensive Income. The increase in net and comprehensive income during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023 was primarily attributable to a higher gross margin on home closings of $36 million and a decrease in contingent consideration revaluation, partially offset by additional SG&A. The effective tax rate decreased by 4% during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily attributable to greater windfall tax benefits from stock-based compensation, as well as a higher number of home closings expected to qualify for the 45L tax credit in the current year compared to the prior year. The changes in net and comprehensive income attributable to Dream Finders Homes, Inc. were consistent with the changes in net and comprehensive income, apart from the change in noncontrolling interests for the period. The change in noncontrolling interests for the six months ended June 30, 2024 as compared to six months ended June 30, 2023 was due to the winding down of certain of our consolidated joint ventures.

Previous wording

Income before taxes for the three months ended March 31, 2024 for our Financial Services segment, net of reconciling items from equity method investments, was $5 million, an increase of $1 million, or 25%, from $4 million for the three months ended March 31, 2023. The increase in income before taxes for the Financial Services segment was primarily attributed to higher funded loan volume by Jet HomeLoans.

Current wording

Income before taxes for the three and six months ended June 30, 2024 for our Financial Services segment, net of reconciling items from equity method investments, was $7 million and $12 million, respectively, as compared to the three and six months ended June 30, 2023 of $5 million and $9 million, respectively. The increase in income before taxes for the Financial Services segment was primarily attributed to higher funded loan volume by Jet HomeLoans.

Previous wording

For the three months ended March 31, 2024, Jet HomeLoans originated and funded 878 home loans with an aggregate principal amount of approximately $380 million as compared to 621 home loans with an aggregate principal amount of approximately $249 million for the three months ended March 31, 2023. For the three months ended March 31, 2024 and 2023, respectively, Jet HomeLoans had net income of approximately $6 million and $5 million. Our interest in Jet HomeLoans is accounted for under the equity method and is not consolidated in our consolidated financial statements, as we do not control and are not deemed the primary beneficiary of the VIE. Refer to Note 6, Variable Interest Entities to the condensed consolidated financial statements for information on how the Company accounts for VIEs.

Current wording

For the three and six months ended June 30, 2024, Jet HomeLoans originated and funded 1,183 and 2,061 home loans with an aggregate principal amount of approximately $524 million and $904 million, respectively, as compared to the three and six months ended June 30, 2023 of 735 and 1,356 home loans with an aggregate principal amount of approximately $293 million and $542 million, respectively. For the three and six months ended June 30, 2024, Jet HomeLoans had net income of approximately $7 million and $13 million, respectively, as compared to net income for the three and six months ended June 30, 2023 of $4 million and $9 million, respectively. Prior to July 1, 2024, our interest in Jet HomeLoans was accounted for under the equity method and was not consolidated in our condensed consolidated financial statements. On July 1, 2024, the Company acquired the remaining interest in Jet HomeLoans. Refer to Note 13, Subsequent Events to the condensed consolidated financials statements for additional information.

Previous wording

For the three months ended March 31, 2024, our wholly owned subsidiary, DF Title, had income before taxes of $4 million, an increase of $1 million, or 33%, from $3 million for the three months ended March 31, 2023. The increase in income before taxes was driven by the increase in home closings and ASP of homes closed, expansion of the title agency operations in the State of Texas, as well as cost management efforts.

Current wording

For both the three and six months ended June 30, 2024, our wholly owned subsidiary, DF Title, had income before taxes of $2 million, as compared to $1 million and $2 million for the three and six months ended June 30, 2023, respectively. The slight increase in income before taxes from the prior quarter was mostly driven by the increase in home closings.

Previous wording

As of March 31, 2024, our lot deposits for finished lot option and land bank option contracts were $268 million. As of March 31, 2024, we controlled 36,462 lots under finished lot option and land bank option contracts.

Current wording

As of June 30, 2024, our lot deposits for finished lot option and land bank option contracts were $301 million. As of June 30, 2024, we controlled 40,678 lots under finished lot option and land bank option contracts.

Previous wording

(2)As of March 31, 2024, the Company had 8,022 owned lots, of which 5,061 were included in construction in process (“CIP”) and finished homes within the Condensed Consolidated Balance Sheet. Of the 5,061 owned lots included in CIP and finished homes, 4,565 were under construction, 368 were completed spec homes and 128 were model homes. The remaining owned lots were purchased just-in-time to start construction through existing lot option contracts.

Current wording

(2)As of June 30, 2024, the Company had 8,546 owned lots, of which 5,798 were included in construction in process (“CIP”) and finished homes within the Condensed Consolidated Balance Sheet. Of the 5,798 owned lots included in CIP and finished homes, 5,194 were under construction, 461 were completed spec homes and 143 were model homes. The remaining owned lots were purchased just-in-time to start construction through existing lot option contracts.

Previous wording

(3)As of March 31, 2024, the Company had 1,697 owned lots and 874 controlled lots under built-for-rent contracts (see “—Net Sales, Backlog and Closings for a definition of built-for-rent contracts).

Current wording

(3)As of June 30, 2024, the Company had 1,533 owned lots and 1,029 controlled lots under built-for-rent contracts (see “—Net Sales, Backlog and Closings for a definition of built-for-rent contracts).

Previous wording

(4)As of March 31, 2024, the Crescent Homes acquisition contributed 619 and 5,025 owned and controlled lots, respectively.

Current wording

(4)As of June 30, 2024, the Crescent Homes acquisition contributed 706 and 5,171 owned and controlled lots, respectively.

Previous wording

A community becomes active once the model is completed or the community has its fifth net new order. 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 new orders for our business. As of March 31, 2024, we had 232 active communities, an increase of 12 communities, or 5%, as compared to 220 active communities as of March 31, 2023.

Current wording

A community becomes active once the model is completed or the community has its fifth net new order. 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 new orders for our business. As of June 30, 2024, we had 222 active communities, an increase of 2 communities, or 1%, as compared to 220 active communities as of June 30, 2023.

Previous wording

Our active community count excludes communities under the Company's 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, 2024, the Company had 15 communities delivering closings under built-for-rent contracts.

Current wording

Our active community count excludes communities under the Company's 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 June 30, 2024, the Company had 16 communities delivering closings under built-for-rent contracts, as compared to 22 communities as of June 30, 2023.

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 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 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, trade disputes 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 cost of sales and, in turn, our net income.

Previous wording

The following table presents our net sales, starts and closings in each of our homebuilding segments for the three months ended March 31, 2024 and 2023:

Current wording

The following tables present our net sales, starts and closings in each of our homebuilding segments for the three and six months ended June 30, 2024 and 2023:

Previous wording

(1)Excluding net sales under built-for-rent contracts, net sales for thethree months ended March 31, 2024 in the Southeast segment increased 19% when compared to thethree months ended March 31, 2023.

Current wording

(1)Excluding net sales under built-for-rent contracts, net sales for the six months ended June 30, 2024 in the Southeast segment decreased 3% when compared to the six months ended June 30, 2023.

Previous wording

Our backlog of sold homes (“backlog”) consists of homes under contract that have not yet been delivered to a homebuyer or third-party investor. Backlog represents the number of homes in backlog from the previous period, plus sales of homes during the current period less cancellations of existing sales contracts during the period (“net sales”), minus the number of home closings during the period. Our backlog at any given time will be affected by cancellations and the number of our active communities.

Current wording

Our backlog of sold homes (“backlog”) consists of homes under contract that have not yet been delivered to a homebuyer or third-party investor. Backlog represents the number of homes in backlog from the previous period, plus net sales, minus the number of home closings during the period. Our backlog at any given time will be affected by cancellations and the number of our active communities.

Previous wording

Homes in backlog are generally closed within one to nine months. The present shift towards spec home sales versus pre-order sales has led to a decrease in the number of homes remaining in backlog when compared to previous quarters. In addition, certain circumstances may impact our backlog conversion, such as built-for-rent contracts, which are customarily delivered over a longer period of time, as well as pre-order sales in new communities. The Company’s backlog may be impacted by customer cancellations for various reasons that are beyond our control, and, in light of our minimal required deposit, there is little negative impact to the potential homebuyer from the cancellation of the purchase contract.

Current wording

Homes in backlog are generally closed within one to nine months. The present shift towards spec home sales versus pre-order sales has led to a decrease in the number of homes remaining in backlog when compared to previous quarters. In addition, certain circumstances may impact our backlog conversion, such as built-for-rent contracts, which are customarily delivered over a longer period of time, as well as pre-order sales in new communities. The Company’s backlog may be impacted by customer cancellations for various reasons that are beyond our control, and, in light of our minimal required deposit, there is little negative impact to the potential homebuyer from the cancellation of the sales contract.

Previous wording

(1)Backlog includes 493 homes from our Crescent Homes acquisition.

Current wording

(1)Backlog as of June 30, 2024 includes 490 homes from our Crescent Homes acquisition.

Previous wording

Backlog of sold homes as of March 31, 2024 was 4,524 homes valued at approximately $2.3 billion based on ASP, a decrease of 955 homes and $0.2 billion in value, or 17% and 8%, respectively, from 5,479 homes valued at approximately $2.5 billion as of March 31, 2023. The overall decrease in backlog is reflective of an increase in sales of move-in ready spec homes relative to pre-order sales, and to a lesser extent a reduction in net sales under built-for-rent contracts when compared to the prior year quarter. Spec homes typically result in quicker closings and turnover of the backlog. Approximately 727 of the homes in our backlog are expected to be delivered in 2025 and beyond.

Current wording

Backlog of sold homes as of June 30, 2024 was 4,205 homes valued at approximately $2.1 billion based on ASP, a decrease of 1,083 homes and $0.4 billion in value, or 20% and 15%, respectively, from 5,288 homes valued at approximately $2.5 billion as of June 30, 2023. The overall decrease in backlog is primarily reflective of an increase in sales of move-in ready spec homes relative to pre-order sales and, to a lesser extent, a reduction in built-for-rent contracts in backlog when compared to June 30, 2023. Spec homes typically result in quicker closings and turnover of the backlog. Approximately 1,088 of the homes in our backlog are expected to be delivered in 2025 and beyond.

Previous wording

Southeast. Backlog for the Southeast segment as of March 31, 2024 was 1,933 homes, a decrease of 1,509 from 3,442 homes as of March 31, 2023. The decrease was primarily attributable to an increase in sales of move-in ready spec homes relative to pre-order sales, lower number of communities open for sales and to a lesser extent a reduction in net sales under built-for-rent contracts when compared to the prior year quarter.

Current wording

Southeast. Backlog for the Southeast segment as of June 30, 2024 was 1,723 homes, a decrease of 1,428 from 3,151 homes as of June 30, 2023. The decrease from prior year was primarily attributable to more sales of move-in ready spec homes relative to pre-order sales, a reduction in net sales relative to closings under built-for-rent contracts and lower retail net sales. The decrease in retail net sales was mainly due to slower community openings as a result of temporary delays in the land development and entitlement process.

Previous wording

Mid-Atlantic. Backlog for the Mid-Atlantic segment as of March 31, 2024 was 1,202 homes, an increase of 428 from 774 homes as of March 31, 2023. The increase in backlog was largely attributable to the Crescent Homes acquisition, as well as higher net sales relative to closings in the first quarter of 2024 when compared to the first quarter of 2023.

Current wording

Mid-Atlantic. Backlog for the Mid-Atlantic segment as of June 30, 2024 was 1,202 homes, an increase of 470 from 732 homes as of June 30, 2023. The increase in backlog from prior year was largely attributable to the Crescent Homes acquisition and, to a lesser extent, higher net sales relative to closings.

Previous wording

Our cancellation rate for the three months ended March 31, 2024 was 21.0%, remaining consistent when compared to the 20.9% cancellation rate for the three months ended March 31, 2023. The increased cancellation rate in the Southeast segment was attributable to a built-for-rent contract of 229 units that was terminated during the quarter based on a strategic decision to convert the controlled lots underlying the deal into future retail sales. The total cancellation rate and the Southeast cancellation rate excluding built-for-rent activity in the quarter were 11.1% and 11.7%, respectively, for the three months ended March 31, 2024.

Current wording

Our cancellation rate for the three months ended June 30, 2024 was 13.2%, an improvement when compared to the 15.6% cancellation rate for the three months ended June 30, 2023. Our cancellation rate for the six months ended June 30, 2024 was 16.8%, an improvement when compared to the 18.1% cancellation rate for the six months ended June 30, 2023. The overall improvement in cancellation rate is mostly a result of the trend toward higher spec sales relative to pre-order sales. The cancellation rate in the Southeast segment for the six months ended June 30, 2024 was primarily attributable to a built-for-rent contract of 229 units that was terminated during first the quarter of 2024 based on a strategic decision to convert the controlled lots underlying the deal into future retail sales. The total cancellation rate and the Southeast cancellation rate excluding built-for-rent activity were 12.1% and 12.9%, respectively, for the six months ended June 30, 2024.

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 and business acquisitions. The estimated cash consideration for the Crescent acquisition as of March 31, 2024 was $207 million. Refer to Note 2, Business Combinations to the condensed consolidated financial statements for 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 and business acquisitions. The cash consideration for the Crescent acquisition as of June 30, 2024 was $210 million. Refer to Note 2, Business Combinations to the condensed consolidated financial statements for information.

Previous wording

As of March 31, 2024, we had $239 million in cash and cash equivalents, excluding $28 million of restricted cash, and total liquidity as of March 31, 2024 was $500 million.

Current wording

As of June 30, 2024, we had $275 million in cash and cash equivalents, excluding $22 million of restricted cash, and total liquidity as of June 30, 2024 was $475 million.