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 title insurance and mortgage banking solutions.

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, 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 ancillary products to homebuyers.

Previous wording

(5)Return on participating equity is calculated as net and comprehensive 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

(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.

Previous wording

(1)Contingent consideration revaluation, which is comprised of amounts from the homebuilding segments (“contingent consideration”), excludes $0.1 million and $0.3 million of Corporate contingent consideration expenses for the three months ended March 31, 2025 and 2024, respectively. Corporate amounts represent contingent consideration relating to our homebuilding business that the Company does not charge to the segments.

Current wording

(1)Contingent consideration revaluation, which is comprised of amounts from the homebuilding segments (“contingent consideration”), excludes $0.3 million and $0.6 million of Corporate contingent consideration expenses for the three months ended June 30, 2025 and 2024, respectively. Corporate amounts represent contingent consideration relating to our homebuilding business that we do not charge to the segments.

Previous wording

Homebuilding Revenues. The increase in homebuilding revenues was primarily attributable to 1,925 home closings for the three months ended March 31, 2025, an increase of 270 homes, or 16%, from 1,655 home closings for the three months ended March 31, 2024. The increase was primarily attributable to the Midwest segment, which had an increase of 131 closings with an ASP of $580,221, which is the highest ASP of our homebuilding segments. 107 home closings with an ASP of $358,314 were contributed by the Liberty Communities acquisition, 90 of which were included in the Southeast segment, which had a total increase in home closings of 109. The consolidated ASP of homes closed increased 1% when comparing the three months ended March 31, 2025 to the three months ended March 31, 2024.

Current wording

Homebuilding Revenues. The increase in homebuilding revenues was primarily attributable to 2,232 home closings for the three months ended June 30, 2025, an increase of 201 homes, or 10%, from 2,031 home closings for the three months ended June 30, 2024. The increase was primarily attributable to the Liberty Communities acquisition, which contributed 179 home closings with an ASP of $355,550, 150 of which were included in the Southeast segment, which had a total increase in home closings of 174. The Midwest segment had an increase of 37 closings with an ASP of $553,989, which is the highest ASP of our homebuilding segments. The consolidated ASP of homes closed decreased 7% when comparing the three months ended June 30, 2025 to the three months ended June 30, 2024, primarily a result of the increased use of sales incentives by $36 million and changes in product mix during the second quarter of 2025.

Previous wording

Midwest. Our Midwest segment homebuilding revenues for the three months ended March 31, 2025 were $424 million, an increase of $89 million, or 27%, from $335 million for the three months ended March 31, 2024. This increase was primarily due to higher home closings of 131, or 22% and, to a lesser extent, an increase of 1% in the ASP of homes closed. Homebuilding gross margin percentage was 17.7% for the three months ended March 31, 2025, representing an increase of 20 bps, or 1% from 17.5% when compared to the three months ended March 31, 2024. The increase in homebuilding gross margin percentage was due to direct cost reductions, mostly offset by an increase in land and financing costs.

Current wording

Midwest. Our Midwest segment homebuilding revenues for the three months ended June 30, 2025 were $457 million, an increase of $10 million, or 2%, from $447 million for the three months ended June 30, 2024. This increase was primarily due to higher home closings of 37, or 5% and strategic lot sales within the segment, resulting in $13 million of additional homebuilding revenues, partially offset by a decrease of 5% in the ASP of homes closed. Homebuilding gross margin percentage was 14.6% for the three months ended June 30, 2025, representing a decrease of 350 bps, or 19%, when compared to the three months ended June 30, 2024. The decrease in homebuilding gross margin percentage was primarily due to lower ASP from a strategic change in product offerings and higher sales incentives, as well as an increase in 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 three months ended March 31, 2025, an increase of 230 bps from 9.7% for the three months ended March 31, 2024, which resulted in an increase of $36 million. The dollar and percentage increase in SG&A was primarily attributable to higher compensation costs of $13 million, largely due to our growth from continued expansion, including the February 2024 acquisition of Crescent, the January 2025 acquisition of Liberty Communities and our operational expansions in Florida and Arizona. Compensation costs for the three months ended March 31, 2025 also included a one-time stock acceleration expense of approximately $4 million. Additionally, for the three months ended March 31, 2025, SG&A included $18 million of spend on forward commitment programs to allow our homebuyers to access lower mortgage interest rates on home loans, representing an $11 million increase when compared to the three months ended March 31, 2024. As a result of the Crescent and Liberty acquisitions described above, there was SG&A of $8 million in the first quarter of 2025 that was not included in the first quarter of 2024.

Current wording

Selling, General and Administrative Expense. Selling, general and administrative expense for the homebuilding segments (“SG&A”) as a percentage of homebuilding revenues was 12.2% for the three months ended June 30, 2025, an increase of 300 bps from 9.2% for the three months ended June 30, 2024, which resulted in an increase of $37 million. The dollar and percentage increase in SG&A was primarily attributable to the $25 million increase in spend on forward mortgage commitment programs to allow our homebuyers to access lower mortgage interest rates on home loans during the three months ended June 30, 2025 compared to June 30, 2024. Additionally, for the three months ended June 30, 2025, SG&A included higher compensation costs of $9 million and marketing and other general expenses of $3 million, largely due to our continued growth, including the January 2025 acquisition of Liberty Communities, the May 2025 acquisition of Green River Builders and our operational expansions in Florida and Arizona. As a result of the Liberty acquisition, there was SG&A of $8 million in the second quarter of 2025 that was not included in the second quarter of 2024.

Previous wording

Homebuilding Cost of Sales and Homebuilding Gross Margin. The higher homebuilding cost of sales was primarily due to the increase in home closings for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase in homebuilding gross margin as a percentage of homebuilding revenues when comparing the three months ended March 31, 2025 and 2024 was primarily attributable to direct cost reductions and changes in product mix, partially offset by higher land and financing costs. In addition, the Liberty Communities homebuilding gross margin for the quarter ended March 31, 2025 included amortization of purchase accounting adjustments associated with home closings that negatively impacted the homebuilding gross margin percentage by 19 basis points (“bps”).

Current wording

Homebuilding Cost of Sales and Homebuilding Gross Margin. The higher homebuilding cost of sales was primarily due to the increase in home closings for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024. In addition to the lower ASP, the decrease in homebuilding gross margin as a percentage of homebuilding revenues, when comparing the six months ended June 30, 2025 and 2024, was primarily attributable to higher land and financing costs, partially offset by direct cost reductions. In addition, the Liberty Communities homebuilding gross margin for the six months ended June 30, 2025 included amortization of purchase accounting adjustments associated with home closings that negatively impacted the homebuilding gross margin percentage by approximately 11 bps.

Previous wording

Southeast. Our Southeast segment total homebuilding revenues for the three months ended March 31, 2025 were $308 million, an increase of $28 million, or 10%, from $280 million for the three months ended March 31, 2024. This increase in revenue was primarily driven by an increase in home closings of 109, or 19%, which was partially offset by a 6% decrease in the ASP of homes closed. Homebuilding gross margin percentage was 19.5% for the three months ended March 31, 2025, representing an increase of 160 bps, or 9%, when compared to the three months ended March 31, 2024. The increase in homebuilding gross margin percentage was mostly the result of direct cost reductions, partially offset by higher land and financing costs and, to a lesser extent, a gross margin of 12.4% for the Liberty Communities operations. Liberty Communities contributed $33 million in homebuilding revenues and 90 home closings with an ASP of $365,447 for the three months ended March 31, 2025.

Current wording

Southeast. Our Southeast segment homebuilding revenues for the six months ended June 30, 2025 were $675 million, an increase of $54 million, or 9%, from $621 million for the six months ended June 30, 2024. This revenue growth was primarily driven by an increase in home closings of 283, or 23%, which was partially offset by a 10% decrease in the ASP of homes closed. Homebuilding gross margin percentage was 18.6% for the six months ended June 30, 2025, representing a decrease of 80 bps, or 4%, when compared to the six months ended June 30, 2024. The decrease in homebuilding gross margin percentage was mostly the result of higher land and financing costs and, to a lesser extent, a gross margin of 15.7% for the Liberty Communities operations. Liberty Communities contributed $89 million in homebuilding revenues and 240 home closings with an ASP of $370,734 for the six months ended June 30, 2025.

Previous wording

Excluding Liberty, homebuilding revenues in the Southeast segment decreased by 2% when comparing the three months ended March 31, 2025 and 2024 mostly due to a lower ASP of $458,030, a decrease of $15,578, or 3%, slightly offset by 19, or 3%, more home closings. Without Liberty, homebuilding gross margin percentage was 20.4% for the three months ended March 31, 2025, representing an increase of 250 bps, or 14%, when compared to the three months ended March 31, 2024. The increase in this homebuilding gross margin percentage was primarily the result of direct cost reductions and, to a lesser extent, cycle time improvements, partially offset by higher land and financing costs.

Current wording

Excluding Liberty, homebuilding revenues in the Southeast segment decreased by 6% when comparing the six months ended June 30, 2025 and 2024 mostly due to a lower ASP of $454,748, a decrease of $37,572, or 8%, partially offset by 1,289, or 3%, higher home closings. Without Liberty, homebuilding gross margin percentage was 19.1% for the six months ended June 30, 2025, representing a decrease of 30 bps, or 2%, when compared to the six months ended June 30, 2024. The decline in this homebuilding gross margin percentage was primarily the result of higher land and financing costs and changes in product mix.

Previous wording

Mid-Atlantic. Our Mid-Atlantic segment total homebuilding revenues for the three months ended March 31, 2025 were $238 million, an increase of $28 million, or 13%, from $210 million for the three months ended March 31, 2024. This revenue growth was primarily driven by an increase in ASP and home closings of $29,129, or 7%, and 30, or 6%, respectively, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. Homebuilding gross margin percentage was 21.6% for the three months ended March 31, 2025, representing an increase of 360 bps, or 20%, when compared to the three months ended March 31, 2024. The increase in homebuilding gross margin percentage was mostly the result of direct cost reductions, particularly from the Crescent Ventures, LLC (“Crescent Homes” or “Crescent”) operations which had a gross margin of 24.8%, partially offset by other changes in product mix as well as higher land and financing costs.

Current wording

Mid-Atlantic. Our Mid-Atlantic segment homebuilding revenues for the six months ended June 30, 2025 were $513 million, an increase of $39 million, or 8%, from $474 million for the six months ended June 30, 2024. This revenue growth was primarily driven by an increase in ASP and home closings of $19,474, or 5%, and 20, or 2%, respectively, for the six months ended June 30, 2025 compared to the six months June 30, 2024. Homebuilding gross margin percentage was 19.6% for the six months ended June 30, 2025, representing an increase of 150 bps, or 8%, when compared to the six months ended June 30, 2024. The increase in homebuilding gross margin percentage was mostly the result of direct cost reductions and changes in product mix, particularly from the Crescent operations, which had a gross margin of 23.1%, partially offset by higher land and financing costs.

Previous wording

Contingent Consideration Revaluation.$1 million of the decrease in contingent consideration expense for the three months ended March 31, 2025 was attributable to lower fair value adjustments of future expected earnout payments related to the MHI acquisition, as the earnout period for the MHI acquisition is nearing its completion in the third quarter of 2025, and it is less susceptible to changes in long-term underlying projections. Additionally, the earnout period related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC concluded in the third quarter of 2024.

Current wording

Contingent Consideration Revaluation.$18 million of the change from contingent consideration expense to income for the six months ended June 30, 2025 was attributable to lower actual results achieved during the second quarter of 2025 when compared to expectations and revised pre-tax income forecasts related to the MHI acquisition for the third quarter of 2025, which is the final quarter of the earnout period for the MHI acquisition. Additionally, the earnout period related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC concluded in the third quarter of 2024.

Previous wording

Other Expense (Income), Net.$7 million of the increase in other expense, net for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was due to purchase price adjustments related to the Crescent acquisition, which were recognized outside of the measurement period. Refer to Note 2, Acquisitions to the condensed consolidated financial statements for additional information.

Current wording

Other Expense (Income), Net. The increase in other expense, net for the six months ended June 30, 2025 as compared to the six months ended June 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.

Previous wording

Income Before Taxes of Homebuilding Operations. The decrease in income before taxes of homebuilding operations during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 was primarily attributable to the increases in SG&A and in other expense, net, mostly offset by higher home closings volume and homebuilding gross margin and, to a lesser extent, the reduction in contingent consideration expense, all explained above.

Current wording

Income Before Taxes of Homebuilding Operations. The decrease in income before taxes of homebuilding operations during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily attributable to the increases in SG&A, the reduction in homebuilding gross margin, and the increase in other expense, net, partially offset by higher home closings volume and, to a lesser extent, the income from contingent consideration revaluation, all of which are explained above.

Previous wording

As of March 31, 2025 and December 31, 2024, our lot deposits for finished lot option and land bank option contracts were $518 million and $458 million, respectively. As of March 31, 2025 and December 31, 2024, we controlled 60,538 and 54,698 lots, respectively, under finished lot option and land bank option contracts.

Current wording

As of June 30, 2025 and December 31, 2024, our lot deposits for finished lot option and land bank option contracts were $531 million and $458 million, respectively. As of June 30, 2025 and December 31, 2024, we controlled 63,180 and 54,698 lots, respectively, under finished lot option and land bank option contracts.

Previous wording

(2)As of March 31, 2025 and December 31, 2024, the Company had 593 and 603 controlled lots under built-for-rent contracts, respectively.

Current wording

(2)As of June 30, 2025 and December 31, 2024, we had 734 and 603 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 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, 2025, we had 258 active communities, an increase of 26 communities, or 11%, as compared to 232 active communities as of March 31, 2024.

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, 2025, we had 271 active communities, an increase of 49 communities, or 22%, as compared to 222 active communities as of June 30, 2024.

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 March 31, 2025, the Company had 5 communities delivering closings under built-for-rent contracts, as compared to 15 communities as of March 31, 2024.

Current 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 June 30, 2025, we had 7 communities delivering closings under built-for-rent contracts, as compared to 16 communities as of June 30, 2024.

Previous wording

A new order (“new 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 the Company has received a nonrefundable deposit.

Current wording

A new order (“new 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.

Previous 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, 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 and six months ended June 30, 2025 and 2024:

Previous wording

(1)The quarter ended March 31, 2024 included a built-for-rent contract termination discussed further below. Excluding net sales under built-for-rent contracts, net sales in the Southeast segment increased 36% during the quarter ended March 31, 2025 when compared to the quarter ended March 31, 2024. 24% of the increase was due to net sales from the Liberty Communities acquisition on January 23, 2025.

Current wording

(1)Excluding built-for-rent activity, net sales in the Southeast segment increased 38% during the quarter ended June 30, 2025 when compared to the quarter ended June 30, 2024. 31% of the increase was due to net sales from the Liberty Communities acquisition on January 23, 2025.

Previous wording

Backlog of sold homes as of March 31, 2025 was 2,802 homes valued at approximately $1.4 billion based on ASP, a decrease of 1,722 homes and $0.9 billion in value, or 38% and 40%, respectively, from 4,524 homes valued at approximately $2.3 billion as of March 31, 2024. The overall decrease in backlog was mostly reflective of a continued trend toward move-in ready spec homes relative to pre-order sales and, to a lesser extent, a reduction in built-for-rent contracts in backlog. Spec homes typically result in quicker closings and turnover of the backlog within the same reporting period. Approximately 370 of the homes in our backlog are expected to be delivered in 2026 and beyond.

Current wording

Backlog of sold homes as of June 30, 2025 was 2,513 homes valued at approximately $1.2 billion based on ASP, a decrease of 1,692 homes and $0.9 billion in value, or 40% and 43%, respectively, from 4,205 homes valued at approximately $2.1 billion as of June 30, 2024. The overall decrease in backlog was mostly reflective of a continued trend toward move-in ready spec homes relative to pre-order sales and, to a lesser extent, a reduction in built-for-rent contracts in backlog. Spec homes typically result in quicker closings and turnover of the backlog within the same reporting period. Approximately 516 of the homes in our backlog are expected to be delivered in 2026 and beyond.

Previous wording

Southeast. Backlog for the Southeast segment as of March 31, 2025 was 1,230 homes, a decrease of 703 from 1,933 homes as of March 31, 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, partially offset by the backlog acquired from the Liberty Communities acquisition.

Current wording

Southeast. Backlog for the Southeast segment as of June 30, 2025 was 998 homes, a decrease of 725 from 1,723 homes as of June 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, a reduction in built-for-rent contracts in backlog.

Previous wording

Mid-Atlantic. Backlog for the Mid-Atlantic segment as of March 31, 2025 was 718 homes, a decrease of 484 from 1,202 homes as of March 31, 2024. The decrease in backlog from prior year was attributable to the lower net sales relative to closings, especially under built-for-rent contracts, in addition to the continued trend toward more sales of move-in-ready spec homes relative to pre-order sales.

Current wording

Mid-Atlantic. Backlog for the Mid-Atlantic segment as of June 30, 2025 was 812 homes, a decrease of 390 from 1,202 homes as of June 30, 2024. The decrease in backlog from prior year was primarily attributable to the continued trend toward more sales of move-in-ready spec homes relative to pre-order sales. The decline in backlog value was also due to an increase in built-for-rent contracts in backlog this period, which have lower ASPs relative to retail sales contracts in backlog.

Previous wording

Midwest. Backlog for the Midwest segment as of March 31, 2025 was 854 homes, a decrease of 535 from 1,389 homes as of March 31, 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.

Current wording

Midwest. Backlog for the Midwest segment as of June 30, 2025 was 703 homes, a decrease of 577 from 1,280 homes as of June 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.

Previous wording

Our cancellation rate for the three months ended March 31, 2025 was 11.7%, an improvement of 930 basis points when compared to the 21.0% cancellation rate for the three months ended March 31, 2024. In the first quarter of 2024, the Company had one built-for-rent contract of 229 units that was terminated based on a strategic decision to convert the controlled lots into future retail sales. This termination contributed to the elevated cancellation rate in the Southeast segment and at the consolidated level in the prior year. The overall improvement in the cancellation rate in the Southeast segment for the three months ended March 31, 2025 was primarily attributable to the built-for-rent contract previously described. Excluding the impact of all built-for-rent activity, the cancellation rate still represents one of the lowest in the Company’s history, despite a 190 bps increase from the prior year quarter.

Current wording

Our cancellation rate for the three months ended June 30, 2025 was 14.0%, an increase of 80 bps when compared to the 13.2% cancellation rate for the three months ended June 30, 2024. Our cancellation rate for the six months ended June 30, 2025 was 12.8% , an improvement when compared to the 16.8% for the six months ended June 30, 2024. In the first quarter of 2024, we had one built-for-rent contract of 229 units that was terminated based on a strategic decision to convert the controlled lots into future retail sales. This termination contributed to the elevated cancellation rate in the Southeast segment for the six months ended June 30, 2024.

Previous wording

Our Financial Services segment provides mortgage financing and title services primarily through our wholly owned subsidiaries, Jet HomeLoans and DF Title, respectively. The following table presents selected financial information and supplemental data for our Financial Services segment for the three months ended March 31, 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 and six months ended June 30, 2025 and 2024 (dollars in thousands, unless otherwise indicated):

Previous wording

(1) Supplemental data includes the operations of Jet HomeLoans prior to its consolidation in the Company’s financial statements beginning on July 1, 2024. Refer to Note 2, Acquisitions to the condensed consolidated financial statements for additional information.

Current wording

(1)Supplemental data includes the operations of Jet HomeLoans prior to its consolidation in the Company’s financial statements beginning on July 1, 2024. Refer to Note 2, Acquisitions to the condensed consolidated financial statements for additional information.

Previous wording

The $15 million, or 100%, increase in mortgage revenues, $10 million of the increase in financial services expense and $1 million of the increase in the financial services income before taxes for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, respectively, were all primarily due to the consolidation of Jet HomeLoans beginning July 1, 2024. The income before taxes of Jet HomeLoans prior to July 1, 2024 was included in income from unconsolidated entities in the Condensed Consolidated Statements of Comprehensive Income.

Current wording

The $18 million, or 100%, increase in mortgage revenues, $9 million of the increase in financial services expense and $3 million of the increase in the financial services income before taxes for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, respectively, were all primarily due to the consolidation of Jet HomeLoans beginning July 1, 2024. The income before taxes of Jet HomeLoans prior to July 1, 2024 was included in income from unconsolidated entities in the Condensed Consolidated Statements of Operations.

Previous wording

The $2 million, or 88%, increase in title services revenues, $1 million of the increase in financial services expense and $1 million of the increase in financial services income before taxes for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, respectively, were primarily the result of DF Title’s expansion of operations into the Texas market. Our Texas market was previously serviced by our unconsolidated title joint ventures, which resulted in a partially offsetting impact to financial services income before taxes.

Current wording

$28 million of the increase in title and other services revenues, $26 million of the increase in financial services expense and $2 million of the increase in financial services income before taxes for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, respectively, were the result of the April 2025 acquisition of Alliant Title. To a lesser extent, DF Title’s expansion of operations into the Texas markets also contributed to the increase in financial services income before taxes for the three months ended June 30, 2025. Our Texas market was previously serviced by our unconsolidated title joint ventures, which resulted in a partially offsetting impact to financial services income before taxes.

Previous wording

We define adjusted homebuilding gross margin as homebuilding gross margin excluding the effects of capitalized interest, lot option fees, amortization included in homebuilding cost of sales (adjustments resulting from the application of purchase accounting in connection with acquisitions) and commission expense. Our management believes this information is meaningful because it isolates the impact that these excluded items have on homebuilding gross margin. We include internal and external commission expense in homebuilding cost of sales, not selling, general and administrative expense, and therefore commission expense is taken into account in homebuilding gross margin.

Current wording

We define adjusted homebuilding gross margin as homebuilding gross margin excluding the effects of capitalized interest, lot option fees, amortization included in homebuilding cost of sales (adjustments resulting from the application of purchase accounting in connection with acquisitions) and commission expense. Our management believes this information is meaningful as it isolates the impact that these excluded items have on homebuilding gross margin. We include internal and external commission expense in homebuilding cost of sales, not selling, general and administrative expense, and therefore commission expense is taken into account in homebuilding gross margin.

Previous wording

(2)Includes interest charged to homebuilding cost of sales related to our construction lines of credit and senior unsecured notes, net, as well as lot option fees.

Current wording

(2)Includes interest charged to homebuilding cost of sales related to our senior unsecured notes, net, and revolving credit facility 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.

Previous wording

(1) Includes interest charged to homebuilding cost of sales related to our construction lines of credit and senior unsecured notes, net, as well as lot option fees.

Current wording

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

Previous wording

(2) Includes amortization of purchase accounting adjustments from our acquisitions.

Current wording

(2)Includes amortization of purchase accounting adjustments from our acquisitions.

Previous wording

(3) Calculated as a percentage of total revenues.

Current wording

(3)Calculated as a percentage of total revenues.

Previous wording

Net homebuilding debt to net capitalization is a non-GAAP financial measure that is the sum of construction lines of credit and senior unsecured notes, net 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. 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 that is 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.

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 March 31, 2025 and 2024 for business acquisitions closed during the three months ended March 31, 2025 and 2024 was $119 million and $207 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. Total cash consideration as of June 30, 2025 and 2024 for business acquisitions closed during the six months ended June 30, 2025 and 2024 was $190 million and $210 million, respectively. Refer to Note 2, Acquisitions to the condensed consolidated financial statements for more information.

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 March 31, 2025 and December 31, 2024, our lot deposits related to finished lot option contracts and land bank option contracts were $518 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. 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 June 30, 2025 and December 31, 2024, our lot deposits related to finished lot option contracts and land bank option contracts were $531 million and $458 million, respectively.

Previous wording

(1)As of March 31, 2025 and December 31, 2024, the borrowing base under the Credit Agreement was reduced by the principal amount of the 2028 Notes of $300 million. As of March 31, 2025, the borrowing base calculation included available cash in excess of $25 million. Refer to Note 3, Debt for additional information.

Current wording

(1)The borrowing base under the Credit Agreement is reduced by the principal amount of the 2028 Notes of $300 million. As of June 30, 2025, the borrowing base calculation included available cash in excess of $25 million. Refer to Note 3, Debt for additional information.

Previous wording

Net cash used in operating activities was $45 million for the three months ended March 31, 2025, compared to $248 million of net cash used in operating activities for the three months ended March 31, 2024. The change in net cash used in operating activities was primarily driven by a $114 million decrease of mortgage loans held for sale from the beginning of the current period and lower increases in inventories of $112 million when compared to the prior year quarter, mostly as a result of fewer starts and a higher volume of closings, partially offset by higher lot deposits of $34 million. The change in net cash used in operating activities are net of the effects of the Crescent Homes and Liberty Communities acquisitions.

Current wording

Net cash used in operating activities was $113 million for the six months ended June 30, 2025, compared to $358 million of net cash used in operating activities for the six months ended June 30, 2024. The change in net cash used in operating activities was primarily driven by a $151 million decrease of mortgage loans held for sale from the beginning of the current period and lower increases in inventories of $163 million when compared to the prior year period, mostly as a result of fewer home starts and a higher volume of closings, partially offset by a higher increase in lot deposits of $14 million. 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.

Previous wording

Net cash used in investing activities was $116 million for the three months ended March 31, 2025, compared to $186 million of net cash used in investing activities for the three months ended March 31, 2024, primarily attributable to $111 million in cash paid for the Liberty acquisition during the three months ended March 31, 2025, compared to $184 million in cash paid for the Crescent acquisition during the three months ended March 31, 2024.

Current wording

Net cash used in investing activities was $197 million for the six months ended June 30, 2025, compared to $190 million of net cash used in investing activities for the six months ended June 30, 2024, mostly attributable to $13 million of furniture and fixture purchases, primarily for our model homes, during the six months ended June 30, 2025 relating to our recent operational expansions, compared to $4 million in similar purchases during the six months ended June 30, 2024, partially offset by less payments for acquisitions.