CCS 10-K & 10-Q changes, risk factors and insider trading
Century Communities, Inc. · NYSE · Operative Builders · CIK 1576940 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risk Related to Our Multi-Family Rental Business”
New heading “Adverse changes in general economic conditions may continue to reduce the demand for our homes and, as a result, continue to have a material adverse effect on our business, operating results, and financial condition.”
New heading “Since many of our homebuyers require mortgage financing, the sale of our homes is dependent upon the availability of affordable mortgage financing.”
New heading “Interest rate increases have adversely affected and could continue to adversely affect our revenues and other operating results.”
New heading “Inflation has adversely affected and could continue to adversely affect our operating results.”
New heading “Employment rates affect home demand and loan delinquencies potentially adversely affecting our operating results.”
New heading “Home cancellation rates have adversely affected and could continue to adversely affect our operating results.”
New heading “Our long-term growth depends upon our ability to successfully identify and acquire desirable land lots at reasonable prices for residential build-out.”
New heading “We face substantial inherent and other risks with respect to our land and lot inventory, which could adversely affect our operating results, as could our failure to manage our land acquisition, inventories, and development and construction processes.”
New heading “Our inability to develop our communities successfully and within expected timeframes and budgets could harm our operating results.”
New heading “Our future success depends upon our ability to adapt our business strategy to changing home buying patterns and trends.”
New heading “Our geographic concentration exposes us to localized economic, regulatory, and environmental risks.”
New heading “Utility and resource shortages or rate fluctuations could adversely affect our business and operating results.”
New heading “Raw material and building supply shortages or price fluctuations could increase construction costs and delay home deliveries, adversely affecting our operating results.”
New heading “Our homebuilding operations expose us to significant product liability, warranty, personal injury, environmental, and other liability risks, that may not be fully covered by or exceed our insurance or contractual protections, and also could harm our reputation.”
New heading “Adverse weather and geological conditions could increase costs, delay projects, and reduce housing demand, which could adversely affect our business and operating results.”
New heading “Poor relations with the residents of our communities or other negative publicity could negatively impact our operating results and stock price.”
New heading “We face significant competition in the homebuilding industry and may be unable to compete effectively.”
New heading “A significant portion of our historical growth has been due to our prior acquisitions, and we may not be able to continue to grow through acquisitions. In addition, acquisitions, as well as other investments, involve risk.”
New heading “Risk Related to Our Multi-Family Rental Business”
New heading “Our multi-family rental business, which is relatively new for us, is subject to many of the same risks as with our core homebuilding business, as well as other additional risks, and we may not be successful in this business.”
New heading “Risks Related to Our Financial Services Business”
New heading “The impairment of our ability to sell mortgages into the secondary market could significantly reduce our ability to sell homes unless we are willing to become a long-term investor in the loans we originate, which is also risky.”
New heading “The financial services market is competitive and we may not compete effectively.”
New heading “We are subject to various additional risks relating to our Financial Services business.”
New heading “Our failure to identify, recruit, retain, and develop highly skilled and competent personnel and contractors may adversely affect our standards of service and business.”
New heading “Labor shortages, costs, or disruptions could cause project delays and increased costs, which could adversely affect our margins and other operating results and our reliance on subcontractors exposes us to additional risks.”
New heading “Risks Related to the Governmental, Regulatory, Legal, and Compliance Matters”
New heading “Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses, and limit our homebuilding and other activities, which could adversely affect our operating results.”
New heading “Our common stock has been and may continue to be volatile”
New heading “Inefficient or ineffective allocation of capital may adversely affect our operating results and stockholder value and stockholders disagree with our allocation of capital.”
New heading “Insider ownership and close family relationships amongst our management may raise conflicts of interest.”
New heading “We are subject to several other general risks that could adversely affect our business, operating results and financial condition.”
Removed heading “This summary is not complete and should be read in conjunction with the risk factors that follow.”
Removed heading “Risks Related to the Housing Market and General Economic Conditions”
Removed heading “Risks Related to Environmental Matters”
Removed heading “Risks Related to Weather and Climate Change”
Removed heading “Risk Related to Acquisitions and Joint Venture Investments”
Removed heading “Risk Related to Possible Conflicts of Interest”
Removed heading “We are subject to demand fluctuations in the housing market and homebuilding industry. Any decline in demand for our homes or in the homebuilding industry generally may materially and adversely affect our business, results of operations, and financial condition.”
Removed heading “Global economic and political instability and conflicts could adversely affect our business, financial condition or results of operations.”
Removed heading “Our future success depends upon our ability to successfully adapt our business strategy to changing home buying patterns and trends.”
Removed heading “Our long-term growth depends upon our ability to successfully identify and acquire desirable land parcels at reasonable prices for residential build-out.”
Removed heading “Our geographic concentration could materially and adversely affect us if conditions in the homebuilding industry in our current markets decline for a prolonged period.”
Removed heading “Any increase in unemployment or underemployment may lead to reduced demand for our homes and an increase in the number of loan delinquencies and property repossessions and have an adverse impact on our business and results of operations.”
Removed heading “If homebuyers are not able to obtain suitable financing, our results of operations may decline.”
Removed heading “Interest rate increases or changes in federal lending programs or other regulations could lower demand for our homes, which could materially and adversely affect our business and results of operations.”
Removed heading “Changes to the population growth rates in the markets in which we operate or plan to operate could affect demand for our homes in these regions.”
Removed heading “Inflation has adversely affected and could continue to adversely affect our business and financial results, especially since we may not be able to raise home prices sufficiently to offset increased prices..”
Removed heading “Potential tariffs, if enacted into law, could adversely affect our business and financial results, especially since we may not be able to raise home prices sufficiently to offset increased prices caused by any such tariffs.”
Removed heading “We face potentially substantial risk with respect to our land and lot inventory arising from significant changes in economic or market conditions, which could adversely affect our results of operations and result in write-downs of the carrying values of land we own.”
Removed heading “Increases in our home cancellation rate could have a negative impact on our home sales revenue and homebuilding margins.”
Removed heading “Public health issues such as a major epidemic or pandemic could adversely affect our business or financial results.”
Removed heading “Risks Related to the Homebuilding and Real Estate Industries”
Removed heading “If we are unable to develop our communities successfully or within expected timeframes and budgets, our results of operations could be adversely affected.”
Removed heading “Utility and resource shortages or rate fluctuations could have an adverse effect on our operations.”
Removed heading “A major health and safety incident relating to our business could be costly in terms of potential liabilities and reputational damage.”
Removed heading “We may not be able to compete effectively against competitors in the homebuilding industry, especially in our recent markets and new markets we plan to enter.”
Removed heading “Raw materials and building supply shortages and price fluctuations could delay or increase the cost of home construction and adversely affect our operating results.”
Removed heading “Homebuilding is subject to product liability and warranty claims arising in the ordinary course of business that can be significant.”
Removed heading “We may suffer uninsured losses or suffer material losses in excess of insurance limits.”
Removed heading “Our operating performance is subject to risks associated with the real estate industry.”
Removed heading “Because real estate investments are relatively illiquid, our ability to promptly sell one or more properties for reasonable prices in response to changing economic, financial and investment conditions may be limited and we may be forced to hold non-income producing properties for extended periods of time.”
Removed heading “Poor relations with the residents of our communities could negatively impact sales, which could adversely affect our revenues or results of operations.”
Removed heading “Failure to manage land acquisitions and development and construction processes could result in significant cost overruns or errors in valuing sites.”
Removed heading “Risk Related to Our Financial Services Business”
Removed heading “We are subject to various risks relating to our Financial Services business.”
Removed heading “Our mortgage lending business requires substantial capital, which may not continue to be available to us in the amounts we require.”
Removed heading “Our Financial Services segment can be adversely affected by reduced demand for our homes.”
Removed heading “If our ability to sell mortgages into the secondary market is impaired, that could significantly reduce our ability to sell homes unless we are willing to become a long-term investor in the loans we originate.”
Removed heading “We may be liable for certain limited representations and warranties we make in connection with the sale of our loans.”
Removed heading “The financial services market is competitive and we may not be able to compete effectively in this area.”
Removed heading “Governmental regulation of our Financial Services operations could adversely affect our business or financial results.”
Removed heading “Our ability to collect upon mortgage loans may be limited by the application of state laws.”
Removed heading “Any cyber attack or other security breach of or vulnerability in our technology systems, or those of our customers or other third-party vendors we rely on, especially with respect to our Financial Services business, could have operational impacts, subject us to significant liability, and harm our reputation.”
Removed heading “Interest rate changes typically adversely affect us. Although we attempt to mitigate interest rate risk with hedging activities, such activities may not be effective and also involve risk.”
Removed heading “Failure to recruit, retain and develop highly skilled, and competent personnel may have a material adverse effect on our standards of service and adversely affect our business.”
Removed heading “Failure to find suitable contractors may have a material adverse effect on our standards of service.”
Removed heading “Our reliance on contractors can expose us to various liability risks.”
Removed heading “If we experience shortages in labor supply, increased labor costs or labor disruptions, there could be delays or increased costs in developing our communities or building homes, which could adversely affect our margins and other operating results.”
Removed heading “We depend on key personnel, the loss of which could have a material adverse effect on our business.”
Removed heading “Termination of the employment agreements with the members of our executive management team could be costly and prevent a change in control of the Company.”
Removed heading “Risks Related to the Governmental, Regulatory, Legal and Compliance Matters”
Removed heading “Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses or limit our homebuilding or other activities, which could have a negative impact on our results of operations.”
Removed heading “Changes in accounting rules, assumptions and/or judgments could materially and adversely affect us.”
Removed heading “We may face substantial damages or be enjoined from pursuing important activities as a result of existing or future litigation, arbitration or other claims.”
Removed heading “We are subject to liability under various data protection laws, the non-compliance of which could subject us to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution.”
Removed heading “Failure by our directors, officers, employees or contractors to comply with applicable laws and regulations and codes of conduct could materially and adversely affect us.”
Removed heading “Risks Related to Environmental Matters”
Removed heading “We are subject to environmental laws and regulations, which may increase our costs, limit the areas in which we can build homes and delay completion of our projects.”
Removed heading “We may be liable for claims for damages as a result of use of hazardous materials.”
Removed heading “Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.”
Removed heading “Risks Related to Weather and Climate Change”
Removed heading “Adverse weather and geological conditions may increase costs, cause project delays and reduce consumer demand for housing, all of which could materially and adversely affect our business and results of operations.”
Removed heading “Changes in global or regional climate conditions and governmental actions in response to such changes may adversely affect us by increasing the costs of, or restricting, our planned or future growth activities.”
Removed heading “Climate disclosure rules may increase our costs and litigation risks, which could materially and adversely affect our future results of operations and financial condition.”
Removed heading “Risk Related Acquisitions and Joint Venture Investments”
Removed heading “Acquisitions, investments and/or disposals involve risks.”
Removed heading “A significant portion of our historical growth has been due to our prior acquisitions and we may not be able to continue to grow through acquisitions.”
Removed heading “We have intangible assets, including goodwill, primarily as a result of our prior acquisitions. If these assets become impaired, then our results of operations may be adversely affected.”
Removed heading “Any joint venture investments that we make could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial conditions and disputes between us and our co-venturers.”
Removed heading “Access to future financing or refinancing sources may not be available on favorable terms, or at all, especially in light of current market conditions, which could adversely affect our ability to maximize our returns.”
Removed heading “Increased demand for homes could require us to further increase our indebtedness and credit facilities, and our inability to do that could limit our ability to take full advantage of market opportunities.”
Removed heading “Interest expense on our debt limits our cash available to fund our growth strategies.”
Removed heading “We may not be able to generate sufficient cash flows to meet our debt service obligations.”
Removed heading “The agreements governing our debt include covenants and other provisions that may restrict our financial and business operations. Failure to comply with the covenants and conditions imposed by our debt agreements could restrict future borrowings or cause our debt to become immediately due and payable.”
Removed heading “We are dependent upon payments from our subsidiaries to fund payments on our indebtedness and our ability to receive funds from our subsidiaries is dependent upon the profitability of our subsidiaries and restrictions imposed by law and contracts.”
Removed heading “We may require additional capital in the future and may not be able to secure adequate funds on terms acceptable to us.”
Removed heading “An inability to obtain additional performance, payment and completion surety bonds and letters of credit could limit our future growth.”
Removed heading “The use of SOFR as a benchmark for the determination of interest involves risk.”
Removed heading “Increases in property and sales taxes could prevent potential customers from buying our homes and adversely affect our business or financial results.”
Removed heading “Risk Related to Possible Conflicts of Interest”
Removed heading “As a result of Dale Francescon’s and Robert Francescon’s relationship with the Company, conflicts of interest may arise with respect to any transactions involving or with Dale Francescon, Robert Francescon, or their affiliates, and their interests may not be aligned with yours.”
Removed heading “A trading market for our common stock may not be sustained and our common stock prices could decline.”
Removed heading “If securities analysts do not publish, or cease publishing, research or reports about us, our business or our market, or if they change their recommendations regarding our stock adversely, the price of our common stock and trading volume could decline.”
Removed heading “Future offerings of debt securities, which would rank senior to our common stock upon a bankruptcy liquidation, and future offerings of equity securities, including those that may be senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our common stock.”
Removed heading “We cannot guarantee that our stock repurchase programs will be fully consummated or that our stock repurchase programs will enhance long-term stockholder value, and stock repurchases could increase the volatility of the price of our stock and diminish our cash reserves.”
Removed heading “Negative publicity may affect our business performance and could affect the value of our common stock.”
Removed heading “Scrutiny and evolving expectations from the public, investors, and others regarding our ESG practices could impact our reputation, and compliance with ESG-related policies may impose additional capital and operational expenditures on our business.”
Removed heading “We may change our operational policies, investment guidelines and business and growth strategies without stockholder consent, which may subject us to different and more significant risks in the future.”
Removed heading “If we fail to maintain an effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, our stockholders could lose confidence in our financial results, which could materially and adversely affect us.”
Largest changes
“Demand for our homes is subject to fluctuations, often due to factors outside of our control. …”see in full comparison
“Additionally, our business could be adversely affected by unstable economic and political conditions as well as geopolitical conflicts. …”see in full comparison
“The agreements governing our indebtedness, including our revolving line of credit and the indentures that govern our senior notes, contain negative covenants customary for such financings, such as limiting our ability to sell or dispose of assets, incur additional indebtedness or liens, make certain restricted payments, make certain investments, consummate mergers, consolidations or other business combinations or engage in other lines of business. …”see in full comparison
“As of December 31, 2025, we had approximately $1.4 billion in outstanding indebtedness. As of December 31, 2025, we had a $1.0 billion revolving line of credit, of which $51.5 million was outstanding. During 2025, we paid $81.3 million in interest expense payments. Our charter does not limit the amount of debt we may incur, and our Board of Directors may change our target debt levels at any time without the approval of our stockholders, especially in connection with acquisitions. …”see in full comparison
“Demand for our homes fluctuates, often due to factors beyond our control, including interest rates and Federal Reserve policy; inflation; consumer confidence and spending; employment levels; economic conditions; conditions in the financial, credit and mortgage markets; availability, cost and terms of mortgage financing; lending standards and regulatory requirements; availability and prices of new and existing homes; competition; demographic trends; changing consumer preferences; tariffs and geopolitical uncertainty; and other factors described in this Form 10-K and our other SEC filings. …”see in full comparison
“In the ordinary course of our business, we collect and store certain confidential information, including personal information of homebuyers/borrowers and information about our employees, contractors, vendors and suppliers. This information is entitled to protection under a number of regulatory regimes. We may share some of this information with vendors who assist us with certain aspects of our business, particularly with respect to our mortgage lending business. …”see in full comparison
Full comparison: every changed paragraph (453)
Our business, operating results, financial condition, stock price, and future prospects are subject to risks and uncertainties. The risks described below are not the only ones we face. Additional risks, including those not currently known or considered immaterial, could materially and adversely affect our business, operating results, and financial condition. This section contains “forward-looking statements” and should be read together with the “Cautionary Note about Forward-Looking Statements” section and the rest of this Form 10-K. The summary below is not complete and should be read together with the risk factors that follow.
Our business routinely encounters and attempts to address risks, some of which will cause our future results to differ, sometimes materially, from those originally anticipated. Below, we have described our present view of the material risks facing the Company. The risk factors set forth below are not the only risks that we may face or that could adversely affect us. If any of the circumstances described in the risk factors discussed in this Form 10-K actually occur, our business, prospects, liquidity, financial condition and results of operations could be materially and adversely affected. If this were to occur, the trading price of our securities could decline significantly and stockholders may lose all or part of their investment.
The following discussion of risk factors contains “forward-looking statements,” which may be important to understanding any statement in this Form 10-K or in our other filings and public disclosures. In particular, the following information should be read in conjunction with the sections in this Form 10-K entitled “Cautionary Note about Forward-Looking Statements,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Item 8. Financial Statements and Supplementary Data.”
Risk Factors Summary
This summary is not complete and should be read in conjunction with the risk factors that follow.
Risks Related to the Housing Market and General Economic Conditions
We are subject to demand fluctuations in the housing market and homebuilding industry.
Adverse changes in general economic conditions, including inflation, unemployment rates, interest rates, and availability of financing, global economic and political instability and conflicts, and changing home buying patterns and trends could reduce future demand for our homes.
Our long-term growth depends upon our ability to successfully identify and acquire desirable land parcels at reasonable prices and to successfully manage our land and lot inventory.
Our geographic concentration and changes to the population growth rates and other demographics or conditions in our markets could adversely affect our business.
Risks Related to theour Homebuilding Business and Real Estate IndustriesIndustry
Fluctuations in the demand for our homes may continue to materially affect our business, operating results, and financial condition.
Adverse changes in general economic conditions, including in particular inflation, interest rates, and employment rates, may continue to reduce the demand for our homes and, as a result, continue to have a material adverse effect on our business, operating results, and financial condition.
Since many of our homebuyers require mortgage financing, the sale of our homes is dependent upon the availability of affordable mortgage financing.
Our success depends upon our ability to successfully identify and acquire desirable land and lots at reasonable prices, manage our land and lot inventory, develop our communities within expected timeframes and budgets, and adapt to changing home buying patterns and trends, population growth rates, and other demographics.
Our geographic concentration exposes us to localized economic, regulatory, and environmental risks.
Our operating results are dependent on our ability to develop our communities successfully and within expected timeframes and to maintain good relations with the homeowners in our communities.
We face risks regarding utility, resource, raw material, and building supply and labor shortages and prices,price which have been exacerbated by persistent inflation and supply chain disruptions.fluctuations.
Our homebuilding operations expose us to product liability, warranty, personal injury, environmental, and other liability risks, which may not be covered by or may exceed our insurance or contractual protections, and harm our reputation.
Adverse weather and geological conditions could increase costs, delay projects, and reduce housing demand.
Poor relations with our communities or other negative publicity could harm our business and reputation.
We are subject to potential liability for health and safety incidents and product liability and warranty claims, which may exceed our insured limits.
The homebuilding industry is cyclical, seasonalseasonal, and competitive.
A significant portion of our historical growth is due to acquisitions, which may not continue.
Risk Related to Our Multi-Family Rental Business
Our multi-family rental business, which is relatively new for us, is subject to many of the same risks associated with our core homebuilding business, as well as other additional risks, and may not be successful.
Real estate investments are risky and dependent upon our ability to successfully manage our land acquisitions and development and construction processes.
Our home sales depend on our Financial Services business and our ability to originate loans and resell them into the secondary market. This business subjects us to additional risks and is competitive.
Our mortgage lending business requires substantial capital, which may not continue to be available to us in the amounts we require and at acceptable pricing.
Our Financial Services segment can be adversely affected by reduced demand for our homes and our inability to sell mortgages into the secondary market or potential liability in connection with such sales.
The financial services market is competitive.
Governmental regulation may adversely affect our Financial Services operations.
Our servicing portfolio, interest rate lock commitments, and loans held for sale are subject to fluctuation in values and although we attempt to hedge our exposure, our hedging activities involve risk and may not be effective.
A cyber attack or other security breach of our Financial Services business could subject us to significant liability and harm our reputation.
Our failure to identify, recruit, retain, and develop highly skilled and competent personnel and contractors may adversely affect our standards of service and business.
We rely heavily on contractors, which exposes us to additional risks, and labor shortages, costs, or disruptions could cause project delays or increased costs.
The success of our business is dependent upon highly skilled, competent and key personnel, as well as suitable contractors.
We depend on key personnel, the loss of which could have a material adverse effect on our business.
Government regulations and legal challenges may delay the start or completion of our communities, increase our costs and expenses, or limit our homebuilding or other activities.
We may face substantial damages or be enjoined from pursuing important activities as a result of existing or future litigation, arbitration or other claims.
We are subject to liability under various data protection laws, the non-compliance of which could subject us to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution.
Potential tariffs, if enacted into law, could adversely affect our business and financial results, especially since we may not be able to raise home prices sufficiently to offset increased prices caused by any such tariffs.
Risks Related to Environmental Matters
We are subject to environmentalvarious laws and regulations, which may increase our costs,costs limit the areas in which we can build homes, delay completion of our projects or result inand potential liability.
Risks Related to Weather and Climate Change
Adverse weather and geological conditions may increase our costs, cause project delays and reduce consumer demand for housing.
Changes in global or regional climate conditions and governmental actions in response to such changes, including climate disclosure rules, may adversely affect us by increasing the costs of, or restricting, our planned or future growth activities.
Risk Related to Acquisitions and Joint Venture Investments
Acquisitions, investments and/or disposals involve risks and may result in unexpected costs and unrealized benefits.
A significant portion of our historical growth has been due to our prior acquisitions and we may not be able to continue to grow through acquisitions.
Our business is capital-intensive and any difficulty in obtaining capital or refinancing our indebtedness, or the cost thereof, could impair our business and operating results.
Difficulty in obtaining sufficient additional capital or refinancing our existing indebtedness at reasonable prices when needed could result in an inability to acquire land for our developments or increased costs and delays in the completion of our development projects.
We have substantial indebtednessindebtedness, which restricts our operations and expectcould toadversely continue to use leverage in executingaffect our business strategy.business.
Interest expense on our debt limits our cash available to fund our growth strategies and we may be unable to generate sufficient cash flows to meet our debt service obligations or comply with our covenants.
Tax policies and regulation, including inwith particularrespect any limitation on, or reduction or elimination of,to tax benefits associated with owning a homehomeownership or increases in propertyproperty, sales, and salesother taxes, may adversely affect our businessoperating and increase our costs.results.
Risk Related to Possible Conflicts of Interest
Conflicts of interest may arise as a result of relationships between each of our Executive Chairman, and Chief Executive Officer and their respective affiliates and the Company.
Our stock price can be volatile especially if we miss our guidance or fail to meet analyst expectations.
We cannot assure you we will continue to pay quarterly cash dividends at the current rate.
We have anti-takeover mechanisms that may discourage acquisition proposals.
Management's Discussion & Analysis (MD&A)
New heading “Issuance of 6.625% Senior Notes Due 2033”
New heading “Extinguishment of 6.750% Senior Notes Due 2027”
Removed heading “6.750% Senior Notes Due 2027”
Largest changes
“In October 2025, certain new tariffs took effect related to various imported products used in the homebuilding industry, including cabinets, lumber, and certain other wood products. As of the date of the filing of this report, we have not experienced significant cost increases or supply chain disruptions for raw materials; however, we could experience increases in the costs of materials utilized for the construction of our homes and/or supply chain disruptions that, in turn, would impact our business and our consolidated financial statements in future reporting periods. …”see in full comparison
“In September 2025, we entered into an indenture with U.S. Bank Trust Company, National Association, as trustee pursuant to which we issued $500.0 million aggregate principal amount of our 6.625% Senior Notes due 2033 (the “2033 Notes”) in reliance on Rule 144A and Regulation S under the Securities Act of 1933, as amended (which we refer to as the “Securities Act”). The 2033 Notes were issued at 100% of their principal amount and we received proceeds of $493.1 million, net of $6.9 million in issuance costs. …”see in full comparison
Adjusted net income and adjusted diluted earnings per share (which we refer to as “Adjusted EPS”) are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating trends without the effect of certain non-recurring items. We believe excluding certain non-recurring items provides more comparable assessment of our financial results from period to period. We define adjusted net income as consolidated net income before (i) income taxsee in full comparisonexpense,expense; (ii) inventoryimpairment, if applicableimpairment; (iii)restructuringabandonmentcosts,ofiflotapplicableoptionandcontracts; (iv) restructuring costs; (v) loss on debtextinguishment, if applicable,extinguishment; (vvii) impairment on other investment; and (vii) purchase price accounting for acquired work in processinventory,inventory;ifinapplicable,eachandcase,(vi)asimpairmentapplicableonduringotherainvestments, if applicable,period, less adjusted income tax expense, calculated using our estimated annual effective tax rate after discrete items for the applicable period. Adjusted EPS is calculated by dividing adjusted net income by weighted average common shares – diluted.
The following table presents EBITDA and adjusted EBITDA for the years ended December 31,see in full comparison20242025 and2023.2024. EBITDA and adjusted EBITDA are non-GAAP financial measures we use as a supplemental measure in evaluating operating performance. We define EBITDA as net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) other interest expense (income), and (iv) depreciation and amortization expense. We define adjusted EBITDA as EBITDA before inventory impairment, abandonment of lot option contracts, stock-based compensation expense, restructuring costs, loss on debtextinguishment (if applicable), inventoryextinguishment, impairment(ifonapplicable),other investment, and purchase price accounting for acquired work in processinventoryinventory,(ifin each case as applicable),andduringimpairmentaon other investments (if applicable).period. We believe EBITDA and adjusted EBITDA provide an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, and items considered to be non-recurring. Accordingly, our management believes that these measurements are useful for comparing general operating performance from period to period.NeitherEBITDAnorand adjusted EBITDA should be considered in addition to, and not as a substitute for, consolidated net income in accordance with GAAP as a measure of performance. Our presentation of adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. Each of our EBITDA and adjusted EBITDA is limited as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results of operations as reported under GAAP.
We anticipate the homebuilding markets in each of our operating segments will continue to be tied to both the macro-economic environment and the local economy, and we expect our operating strategy will continue to adapt to market changes, though we cannot provide any assurance that our strategies will remain consistent or continue to be successful. We believe future demand for our homes remains uncertain as futuresee in full comparisoneconomiceconomic, market andmarketgeopolitical conditions remain uncertain, in particular with respect to inflation; the impact of potential future increases or decreases to thefederalU.S. Federal funds interest rate by the U.S. Federal Reserve; interest rates; availability and cost of mortgage loans to homebuyers; financial, credit and mortgage markets; the extent to which and how long government monetarydirectives, actions,directives andeconomic relief effortsactions will impact the U.S. economy; the effect of significant new tariffs and/or duties; consumer confidence; wage growth; household formations; levels of new and existing homes for sale; prevailing home and rental prices; availability and cost of land, labor and construction materials; demographic trends; housing demand; the possibility of an economic recession or another U.S. governmental shutdown; and other factors, including those described elsewhere in this Form 10-K. Specifically, changes in mortgage interest rates impact the costs of owning a home and affect the purchasing power of our customers and could impact homebuyer confidence. Changes in demand for our homes or cancellations due to mortgage interestratesrates, consumer confidence or otherwise affect our operating results in future periods, including our net sales, home deliveries, gross margin, origination volume of and revenues from our Financial Services segment, and net income.As a result, our past performance may not be indicative of our future results.
“During the year ended December 31, 2025, our Century Complete segment generated income before income tax expense of $64.8 million representing a decrease of 40.4% from the prior year, which was primarily driven by decreases in revenue and homebuilding gross margin. During the year ended December 31, 2025, revenue decreased $44.9 million as compared to the prior year, primarily driven by a 4.8% decrease and partially offset by a 0.3% increase in the average sales price per home. …”see in full comparison
Full comparison: every changed paragraph (97)
We are engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 1716 states. In many of our projects, in addition to building homes, we entitle and develop the underlying land. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand has an emphasis on serving the affordable homebuilding market but offers a wide range of buyer profiles including: entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the limited ability to personalize their homes through certain option and upgrade selections. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studiosstudios, centralized locations and the internet, and generally provides no option or upgrade opportunities.selections.
Our homebuilding operations are organized into the following five reportable segments: West, Mountain, Texas, Southeast, and Century Complete. Our indirect wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, IHL Home Insurance Agency, LLC, and IHL Escrow Inc., which provide mortgage, title, insurance brokerage, and escrow services, respectively, primarily to our homebuyers, have been identified as our Financial Services segment. Additionally, our wholly owned subsidiary, Century Living,Living LLC,segment is engaged in the development, constructionconstruction, management, and managementsales of multi-family rental properties, currently all located in Colorado. Century Living, LLC is included in our Corporate segment.
While we offer homes that appeal to a broad range of entry-level, move-up, and lifestyle homebuyers, our offerings are heavily weighted towards providing affordable housing options in each of our homebuyer segments. Additionally, we prefer building move-in-ready homes over built-to-order homes, which we believe allows for a faster construction process, advantageous pricing with subcontractors, and shortened time period from home sale to home delivery, thus allowing our customers greater certainty on their financing and allowing us to more appropriately price the homes and deploy our capital. Of the 11,00710,387 new homes delivered during the year ended December 31, 2024,2025, approximately 93%94% of our deliveries were made to entry-level homebuyers that were below the Federal Housing Administration-insured mortgage limits and approximately 99% of homes delivered were built as move-in ready homes.
During 2024, we completed two acquisitions. On July 31, 2024, we closed on the acquisition of substantially all the assets and operations and assumed certain liabilities of Anglia Homes LP (“Anglia”), a homebuilder with operations in the greater Houston, Texas area, for approximately $127.0 million in cash, inclusive of customary holdbacks. On January 22, 2024, we closed on the acquisition of substantially all the assets and assumed certain liabilities of Landmark Homes of Tennessee, Inc. (“Landmark”), a homebuilder with operations, including six active communities, in Nashville, Tennessee, for approximately $33.4 million in cash, inclusive of customary holdbacks.
WhileMarket conditions in the homebuilding industry hashave continued to be impacted by volatileelevated mortgage rates, currentmacro-economic housingand geopolitical uncertainty, and broader concerns about affordability by homebuyers. Amidst these market conditionsconditions, demonstrate strong underlying demand for affordable new homes, supported by solid demographic trends. Wewe experienced solida slowing in demand during the year ended December 31, 2024,2025, as net new home contracts (new home contracts net of cancellations) for the year ended December2025 31,decreased 20243.3%, increasedrespectively, 20.9%as compared to the prior year. WeStill, there remains an underlying need for affordable new homes, supported by solid demographic trends, and we have continued to provide, when necessary, incentive offerings across our communities, including discounts on base home prices, lot premiums, options and upgrades, and financing incentives, including interest rate buydowns.buydowns and closing cost concessions. In the latter half of 2025, we have also experienced increased acceptance to adjustable-rate mortgages among our homebuyers. During the year ended December 31, 2024,2025, cycle times remainedwere in the four-approximately three- to five-monthfour-month timeframe.
We anticipate the homebuilding markets in each of our operating segments will continue to be tied to both the macro-economic environment and the local economy, and we expect our operating strategy will continue to adapt to market changes, though we cannot provide any assurance that our strategies will remain consistent or continue to be successful. We believe future demand for our homes remains uncertain as future economiceconomic, market and marketgeopolitical conditions remain uncertain, in particular with respect to inflation; the impact of potential future increases or decreases to the federalU.S. Federal funds interest rate by the U.S. Federal Reserve; interest rates; availability and cost of mortgage loans to homebuyers; financial, credit and mortgage markets; the extent to which and how long government monetary directives, actions,directives and economic relief effortsactions will impact the U.S. economy; the effect of significant new tariffs and/or duties; consumer confidence; wage growth; household formations; levels of new and existing homes for sale; prevailing home and rental prices; availability and cost of land, labor and construction materials; demographic trends; housing demand; the possibility of an economic recession or another U.S. governmental shutdown; and other factors, including those described elsewhere in this Form 10-K. Specifically, changes in mortgage interest rates impact the costs of owning a home and affect the purchasing power of our customers and could impact homebuyer confidence. Changes in demand for our homes or cancellations due to mortgage interest ratesrates, consumer confidence or otherwise affect our operating results in future periods, including our net sales, home deliveries, gross margin, origination volume of and revenues from our Financial Services segment, and net income. As a result, our past performance may not be indicative of our future results.
In October 2025, certain new tariffs took effect related to various imported products used in the homebuilding industry, including cabinets, lumber, and certain other wood products. As of the date of the filing of this report, we have not experienced significant cost increases or supply chain disruptions for raw materials; however, we could experience increases in the costs of materials utilized for the construction of our homes and/or supply chain disruptions that, in turn, would impact our business and our consolidated financial statements in future reporting periods. Additionally, during the latter half of 2025, the U.S. Federal Reserve reduced the U.S. Federal funds interest rate, and we cannot provide any assurance as to the impact of any future potential changes to the U.S. Federal funds interest rate on mortgage rates or our current or future business. The potential extent and effect of these and other factors on our business is highly uncertain and outside our control, and our past performance may not be indicative of our future results.
We believe we are well-positioned to benefit from the ongoing shortage of both new and resale homes available for purchase in our key markets and the favorable demographics that support the need for new affordable housing. We believe our operations are prepared to withstand volatility in future market conditions as a result of our product offeringsofferings, which both span the home buying segment and focus on affordable price points, our efficiencies in direct construction costs and cycle times, and our current and future inventories of attractive land positions. We have continued to focus on maintaining an appropriate balance of home and land inventories in relation to anticipated future demand, as well as prudent leverage, and, as a result, we believe we are well positioned to continue to execute on our strategy to optimize stockholder returns.
During the year ended December 31, 2025, we generated total revenues of $4.1 billion, as compared to $4.4 billion in the prior year, and we delivered 10,792 residential units, comprised of 10,387 new homes, 105 previously leased rental homes, and 300 multi-family units delivered through our Century Living business. Our 10,387 new home deliveries, with an average sales price of $378.0 thousand, decreased by 5.6% as compared to the prior year, primarily due to slower absorption rates. The average sales price per new home decreased 3.3% as compared to the prior year, primarily due to higher incentives during 2025. During the year ended December 31, 2025, net new contracts decreased 3.3% to 10,326 as compared to the prior year.
During the year ended December 31, 2024, we generated total revenues of $4.4 billion, as compared to $3.7 billion in the prior year, driven primarily by increased home sales revenue from increased selling communities and increased average sales prices. During the year ended December 31, 2024, we delivered 11,007 homes with an average sales price of $390.9 thousand. The number of homes delivered increased by 15.0% as compared to the prior year, representing growth across all of our segments. Average sales price increased 3.8% as compared to the prior year. During the year ended December 31, 2024, net new contracts increased 20.9% to 10,676 as compared to the prior year.
We ended 20242025 with $150.0$109.4 million of cash and cash equivalents and $3.0$48.6 million of cash held in escrow. We had $135.5$51.5 million outstanding under our revolving line of credit, with a homebuilding debt to capital ratio of 30.3%29.1% and a net homebuilding debt to net capital ratio of 27.4%.25.9%. During the year ended December 31, 2024,2025, we paid quarterly cash dividends to our stockholders of $0.26$0.29 per share, and aggregate cash dividends of $1.04$1.16 per share, a 13%12% increase from the quarterly dividends paid during the year ended December 31, 20232024 of $0.23$0.26 per share, or $0.92$1.04 per share in the aggregate. During the year ended December 31, 2025, we repurchased an aggregate of 2.3 million shares for a total purchase price of approximately $143.6 million and a weighted average price of $63.32 per share. We have continued to strategically manage our lot pipeline, while selectively reducing our lot pipeline by terminating certain contracts in our markets that no longer met our investment criteria, in light of current market conditions, in order to maintain a balance between the number of owned lots as compared to lots we control through option and other contracts, resulting in 80,63260,916 lots owned and controlled at December 31, 2024, a 9.4% increase as compared to December 31, 2023.2025.
DuringFor the year ended December 31,31 2024,2025, weour Financial Services segment generated financialincome servicesbefore revenueincome tax expense of $92.9$19.2 million,million representing ana increasedecrease of 15.8%28.2% as compared tofrom the prior year. During the year ended December 31, 2024,2025, while the capture rate of Century homebuyers increased 2%, the number of mortgages originated increaseddecreased 29.9% as compared to the prior year period, which benefited from increased capture rates,5.8% and the number of loans sold to third parties increaseddecreased 33.4%8.3% as compared to the prior year period. While total loan origination volumes increased during the year ended December 31, 2024 compared to the prior year, the decrease in income before income tax expense of our Financial Services segment was primarily driven by lower margins on mortgages originated due to a more competitive market.year.
Our Century Living operations are engaged in the development, construction, management, and sales of multi-family rental properties. During the year ended December 31, 2025, we generated $97.2 million in multi-family sales revenue and $4.9 million in income before income tax expense, which included the sale of one multi-family rental property comprised of 300 units.
Our Century Living operations are engaged in the development, construction and management of multi-family rental properties. As of December 31, 2024, the Company had three multi-family rental properties under active construction in Colorado, two of which were available for pre-leasing. These three projects represent over 1,000 total multi-family units, including 543 under active construction and 509 completed units, of which 154 were occupied as of December 31, 2024. Further, during the year ended December 31, 2024, one multi-family rental property was sold, resulting in a $23.3 million gain on sale reflected in other income (expense) on our consolidated statements of operations.
(1)Beginning in the fourth quarter of 2025, inventory impairment was reclassified to be included in cost of home sales revenues in our consolidated statements of operations rather than presented as a separate line item and prior year amounts have been reclassified to conform to this presentation.
(3)Beginning in the third quarter of 2025, we added “Abandonment of lot option contracts” as an adjustment in our non-GAAP adjusted EBITDA and adjusted net income calculations, and we have recast the corresponding prior period adjusted EBITDA and adjusted net income amounts to conform to the current presentation and calculation.
(4)Total residential units delivered for the year ended December 31, 2025 is inclusive of 10,387 new homes delivered, 105 previously leased rental homes, and 300 Century Living multi-family units, and for the year ended December 31, 2024 is inclusive of 11,007 homes delivered and 227 Century Living multi-family units.
(5)Beginning in the fourth quarter of 2025, we added “Stock-based compensation expense” as an adjustment in our non-GAAP adjusted EBITDA calculation. Accordingly, we have recast the corresponding prior period adjusted EBITDA amount to conform to the current presentation and calculation.
(2)Homebuilding gross margin percentage is inclusive of $8.8 million in impairment charges for the year ended December 31, 2024 and $1.9 million in impairment charges for the year ended December 31, 2023, included within inventory impairment on our consolidated statements of operations. See Note 14 – Fair Value Disclosures in the Notes to the Consolidated Financial Statements for further detail.
Commencing in the first quarter of 2025, we have separately reported our Century Living segment, previously included in our Corporate segment, in order to reflect the distinct nature of our multi-family rental operations. Accordingly, we have recast the corresponding segment information for the year ended December 31, 2024.
(1)Beginning in the fourth quarter of 2025, inventory impairment was reclassified to be included in cost of home sales revenues in our consolidated statements of operations rather than presented as a separate line item and prior year amounts have been reclassified to conform to this presentation.
(12)Includes cost of land sales and other revenues, and other income (expense), net During the year ended December 31, 2024,2025, our West segment generated income before income tax expense of $142.4$84.5 million,million representing a 59.1%decrease increaseof over40.7% from the prior year, which was primarily driven by an increasedecreases in revenue of $234.6 million and an increase in homebuilding gross margin. The revenue increase duringDuring the year ended December 31, 20242025, wasrevenue decreased $67.1 million as compared to the prior year, primarily driven by a 26.8%1.3% increasedecrease in the number of homehomes delivered and a 6.6%6.2% increasedecrease in the average sales price per home. The increasedecrease in the number of homes delivered was primarily driven by anslower increaseabsorption in the number of homes under construction,rates and the average sales price increaseper home decrease was driven by thehigher mixincentives. of deliveries within individual communities. Homebuilding gross margin was 23.5% forDuring the year ended December 31, 2024,2025, whichhomebuilding improvedgross 180margin basis pointsdecreased from 21.7% in the prior yearyear, period,due primarily drivento byhigher incentives and an increase in impairment charges of $0.6 million as compared to the mixprior of deliveries within individual communities.year.
During the year ended December 31, 2024, our Mountain segment generated income before income tax expense of $129.9 million, a 14.0% increase over the prior year, which was primarily driven by an increase in revenue of $110.2 million, and an increase in homebuilding gross margin. The revenue increase during the year ended December 31, 2024 was primarily driven by a 6.7% increase in the number of home delivered and a 4.9% increase in the average sales price per home. The increase in the number of homes delivered was primarily driven by an increase in the number of homes under construction, and the average sales price increase was driven by the mix of deliveries within individual communities. Homebuilding gross margin was 20.6% for the year ended December 31, 2024, which improved 40 basis points from 20.2% in the prior year period, primarily driven by the mix of deliveries within individual communities.
During the year ended December 31, 2024, our Texas segment generated income before income tax expense of $58.0 million, a 32.6% increase over the prior year, which was primarily driven by an increase in revenue of $165.7 million and an increase in homebuilding gross margin. The revenue increase during the year ended December 31, 2024 was primarily driven by a 28.4% increase in the number of home delivered and a 5.8% increase in the average sales price per home. The increase in the number of homes delivered was primarily driven by an increase in the number of homes under construction, and the average sales price increase was driven by the mix of deliveries within individual communities. Homebuilding gross margin was 19.9% for the year ended December 31, 2024, which improved 110 basis points from 18.8% in the prior year period, primarily driven by the mix of deliveries within individual communities, and partially offset by an increase in impairment charges of $2.8 million.
During the year ended December 31, 2024, our Southeast segment generated income before income tax expense of $102.1 million, a 4.6% decrease over the prior year, which was primarily due to decreased homebuilding gross margin. Homebuilding gross margin was 23.8% for the year ended December 31, 2024, which decreased 330 basis points from 27.1% in the prior year period, primarily driven by the mix of deliveries within individual communities, as well as an increase in impairment charges of $1.1 million recognized during the current year period. This decrease was partially offset by an increase in revenue of $106.0 million, primarily driven by an increase of 20.7% in the number of homes delivered, and partially offset by a decrease of 2.4% in the average sales price per home. The increase in the number of homes delivered was primarily driven by an increase in the number of homes under construction, and the average sales price decrease was driven by the mix of deliveries within individual communities.
During the year ended December 31, 2024,2025, our Century CompleteMountain segment generated income before income tax expense of $108.8$58.8 million,million representing a 9.8%decrease increaseof over54.7% from the prior year, which was primarily driven by an increasedecreases in revenue of $76.9 million and an increase in homebuilding gross margin. The revenue increase duringDuring the year ended December 31, 20242025, wasrevenue decreased $193.1 million as compared to the prior year, primarily driven by a 7.4%14.3% increasedecrease in the number of homehomes delivered and a 1.0%4.8% increasedecrease in the average sales price per home. The increasedecrease in the number of homes delivered was primarily driven by anslower increaseabsorption in the number of homes under construction,rates and the average sales price increaseper home decrease was driven by thehigher mixincentives. of deliveries within individual communities. Homebuilding gross margin was 20.9% forDuring the year ended December 31, 2024,2025, whichhomebuilding improvedgross 70margin basis pointsdecreased from 20.2% in the prior yearyear, period,due primarily drivento byhigher the mix of deliveries within individual communitiesincentives and partially offset by an increase in impairment charges of $3.0$7.4 million.million as compared to the prior year.
During the year ended December 31, 2025, our Texas segment generated income before income tax expense of $31.7 million representing a decrease of 45.3% from the prior year, which was primarily driven by decreases in revenue and homebuilding gross margin. During the year ended December 31, 2025, revenue decreased $46.4 million as compared to the prior year, primarily driven by a 4.4% decrease in the number of homes delivered and a 3.1% decrease in the average sales price per home. The decrease in the number of homes delivered was primarily driven by slower absorption rates and the average sales price per home decrease was driven by higher incentives. During the year ended December 31, 2025, homebuilding gross margin decreased from the prior year, due primarily to higher incentives which were partially offset by a decrease in impairment charges of $2.9 million as compared to the prior year.
During the year ended December 31, 2025, our Southeast segment generated income before income tax expense of $57.0 million representing a decrease of 44.1% from the prior year, which was primarily driven by decreases in revenue and homebuilding gross margin. During the year ended December 31, 2025, revenue decreased $19.4 million as compared to the prior year, primarily driven by a 2.2% decrease in the number of homes delivered and a 0.5% decrease in the average sales price per home. The decrease in the number of homes delivered was primarily driven by slower absorption rates and the average sales price per home decrease was driven by higher incentives. During the year ended December 31, 2025, homebuilding gross margin decreased from the prior year, due primarily to higher incentives and an increase in impairment charges of $5.1 million as compared to the prior year.
During the year ended December 31, 2025, our Century Complete segment generated income before income tax expense of $64.8 million representing a decrease of 40.4% from the prior year, which was primarily driven by decreases in revenue and homebuilding gross margin. During the year ended December 31, 2025, revenue decreased $44.9 million as compared to the prior year, primarily driven by a 4.8% decrease and partially offset by a 0.3% increase in the average sales price per home. The decrease in the number of homes delivered was primarily driven by strong seasonal sales during the fourth quarter of 2025, resulting in increased backlog as of December 31, 2025 as compared to the prior year, and the increase in average sales price per home was driven by the mix of deliveries within individual communities and partially offset by higher incentives. During the year ended December 31, 2025, homebuilding gross margin decreased from the prior year, due primarily to higher incentives and an increase in impairment charges of $2.8 million as compared to the prior year.
Our Financial Services segment originates mortgages for primarily our homebuyers, and as such, the volume of loans originated typically correlates to our number of homes delivered. Fluctuations in financial services income before income tax may occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. OurFor the year ended December 31, 2025, our Financial Services segment generated income before income tax expense of $26.7$19.2 million for the year ended December 31, 2024,representing a 15.4% decrease overof 28.2% from the prior year. During the year ended December 31, 2024,2025, while the capture rate of Century homebuyers increased 2%, the number of mortgages originated increaseddecreased 29.9% as compared to the prior year, which benefited from increased capture rates,5.8% and the number of loans sold to third parties increaseddecreased 33.4%8.3% as compared to prior year period. While total loan origination volumes increased during the year ended December 31, 2024 compared to the prior year,year. theThe decrease in income before income tax expense of our Financial Services segment was primarily driven by lowerfair marginsvalue onadjustments mortgages originated duerelated to aour moremortgage competitiveservicing market.rights portfolio and mortgage loans held for investment, and was partially offset by fair value adjustments in connection with the sale of mortgage servicing rights during the second quarter of 2025.
Our Century Living operations are engaged in the development, construction, management, and sales of multi-family rental properties, currently all located in Colorado. As of December 31, 2025, the Company had two multi-family rental properties, one of which was currently available for leasing. These two projects represent over 750 total multi-family units, including 327 under active construction and 425 completed units, of which 307 units were leased as of December 31, 2025.
During the year ended December 31, 2025, our Century Living segment generated $97.2 million in multi-family sales revenue and $4.9 million in income before income tax expense, which included the sale of one multi-family rental property comprised of 300 units. During the first quarter of 2025, our strategy evolved for our Century Living multi-family rental properties to be predominantly focused on the disposition of the assets shortly after lease stabilization, and accordingly, we have determined that these multi-family rental operations have become part of our ordinary activities, and revenue is recognized as multi-family sales revenue on our consolidated statements of operations. During the year ended December 31, 2024, our Century Living segment generated $19.4 million in income before income tax expense, which included the sale of one multi-family rental property, reflected in other income (expense), net on our consolidated statements of operations.
During the year ended December 31, 2024,2025, our Corporate segment generated a loss of $127.9$126.5 million, as compared to a loss of $134.0$147.3 million during 2023.2024. The decrease in loss was primarily due to decreased compensation costs during the saleyear ofended oneDecember multi-family31, rental2025 property,as resultingcompared into athe $23.3prior millionyear, gainas onwell sale reflected in other income (expense) on our consolidated statements of operations. This gain was offset byas $9.9 million in impairment chargecharges related to other investments during the year ended December 31, 2024, as well as a reduction in interest income as compared to the prior year.2024.
Homebuilding gross margin represents home sales revenues less cost of home sales revenues and inventory impairment, if applicable.revenues. Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, increaseddecreased to 17.6% for the year ended December 31, 2025, as compared to 21.5% for the year ended December 31, 2024,2024. asThe compareddecrease towas 21.2%primarily fordriven by higher incentives during the year ended December 31, 2023.2025 Theas increasecompared was primarily driven by deliveries duringto the prior yearyear, periodand thatpartially carriedoffset higherby incentives.decreased direct construction costs in the latter part of 2025.
In the following table, we calculate our homebuilding gross margin,margin asand our non-GAAP adjusted homebuilding gross margin to exclude inventory impairment, if applicable, and as further adjusted to exclude interest in cost of home sales revenues,revenues and further adjusted to exclude the effect of purchase price accounting for acquired work in process inventory, if applicable. SeeThe Notefollowing 3table Businessalso Combinationsprovides reconciliations of our non-GAAP adjusted homebuilding gross margin excluding inventory impairment and as further adjusted to exclude interest in thecost Notesof tohome sales revenues and the Consolidatedeffect Financialof Statementspurchase price accounting for additional discussion regarding our methodology for estimating the fair value of acquired work in process inventory.inventory to homebuilding gross margin, which is the most comparable GAAP measure.
(1)This non-GAAP financial measure should not be used as a substitute for our operating results in accordance with GAAP. See the reconciliations to the most comparable GAAP measuremeasure, homebuilding gross margin, and other information presented in the table above and in the narrative below and under the heading “—Non-GAAP Financial Measures.” An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.
For the year ended December 31, 2024,2025, our adjusted homebuilding gross margin percentage excluding inventory impairment, interest in cost of home sales revenues, and purchase price accounting for acquired work in process inventory was 23.3%19.9% as compared to 22.5%23.3% for 2023.2024. We believe the above information is meaningful as it isolates the impact that inventory impairment (if applicable),impairment, indebtedness, and acquisitions (ifin each case as applicable) during any period, have on our homebuilding gross margin and allows for comparability of our homebuilding gross margins to previousprior periods and to homebuilding gross margins of our competitors.
Our selling, general and administrative expense decreased $11.6 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was primarily attributable to decreased compensation costs, including adjustments in stock-based compensation expense to reflect a decreased estimate in the number of shares which will ultimately vest and be issued upon settlement of certain performance share unit awards. The decrease was partially offset by increased advertising costs during 2025. During the year ended December 31, 2025, our selling, general and administrative expense as a percentage of home sales revenue increased 90 basis points driven primarily by decreased revenue on a partially fixed cost base.
Our selling, general and administrative expense increased $69.2 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023. This increase was primarily attributable to an increase in internal and external commission expense associated with the increase in home sales revenue and increased compensation and other costs due to increased active community count, and partially offset by decreased stock compensation expense. As a percentage of home sales revenue, our selling, general and administrative expense decreased 40 basis points during the year ended December 31, 2024, driven primarily by increased revenue on a partially fixed cost base.
Our effective tax rate of 24.1% for the year ended December 31, 20242025 is comprised of our statutory federal and blended state rate of 24.5%,24.8%, partially offset by certain permanent differences between taxable income and GAAP income before tax expense. These differences include disallowedestimated deductionsSection for executive compensation offset by estimated45L federal energy home credits for current year2025 home deliveries and other items, partially offset by disallowed deductions for executive compensation, which combined resulted in a net decrease in our effective tax rate of 0.4%.0.7%.
On July 4, 2025, H.R.1, the One Big Beautiful Bill Act, was signed into law, which disallows Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026. As a result, our income tax expense and effective tax rate for 2026 will not reflect a benefit from such tax credits as to homes delivered after June 30, 2026. We have evaluated other elements of the legislation and it did not have a material impact on our effective tax rate for the year ended December 31, 2025.
Our effective rates for the years ended December 31, 2024 and 2023 were impacted by benefits of $6.6 million and $2.6 million, respectively, as a result of federal energy efficient home credits. The Inflation Reduction Act of 2022 (“IRA”) extended the energy efficient home credit beginning January 1, 2023, requiring a more rigorous certification process than previous years and provides a $2,500 or $5,000 tiered credit for new single-family homes meeting designated “Energy Star” or “Zero Energy” program requirements, respectively.
Total assets increaseddecreased by $393.1$72.6 million, or 9.5%,1.6%, to $4.5 billion at December 31, 2024,2025 as compared to $4.1 billion at December 31, 2023,2024, primarily asdue ato result of(1) changes in our inventory balances within our homebuilding segments related to the timing of home and land development construction activities, (2) changes in our Century Living multi-family rental properties inventory balances related to the timing of disposition, development, and construction activities and an(3) increasea decrease in our Financial Services assets, including a decrease in our mortgage servicing rights due to the numbersale of homesapproximately under$3.0 construction.billion of unpaid principal balance of our portfolio during the year ended December 31, 2025.
During the year ended December 31, 2024,2025, we continued to strategically increasemanage our lot pipeline, including both organically and through acquisitions,pipeline resulting in 80,63260,916 lots owned and controlled at December 31, 2024,2025, compared to 73,72080,632 at December 31, 2023.2024. Of our total lots owned and controlled as of December 31, 2024,2025, 44.3%57.1% were owned and 55.7%42.9% were controlled, as compared to 41.5%44.3% owned and 58.5%55.7% controlled as of December 31, 2023.2024. The decrease in the number of controlled lots was driven by the termination of certain contracts in our markets that no longer met our investment criteria, in light of current market conditions.
Net new home contracts (new home contracts net of cancellations) for the year ended December 31, 20242025 increaseddecreased by 1,848350 homes, or 20.9%,3.3%, to 10,67610,326 as compared to 8,82810,676 for the year ended December 31, 2023. These increases were primarily due to more homes available for sale, and supported by underlying solid demand for affordable new homes.2024.
During the year ended December 31, 2025, our average monthly absorption rates decreased by 15.6% to 2.7 per month as compared to 2024, primarily driven by decreased demand during 2025 amidst homebuilding market conditions impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, and broader concerns about affordability by homebuyers.
Our selling communities increaseddecreased by 7117 communities to 322305 communities as of December 31, 2024,2025, as compared to 251322 communities at December 31, 2023.2024. This 28.2%5.3% increasedecrease was a result of an increased land pipeline that resulted in new community openingscloseouts in excess of new community closeoutsopenings during the year ended December 31, 2024, and includes our acquisition of Anglia, which added 26 new communities in our Texas segment at acquisition.2025.
Backlog reflects the number of homes, net of cancellations, for which we have entered into a sales contract with a customer but for which we have not yet delivered the home. As of December 31, 2024,2025, we had 850789 homes in backlog, which represents a decrease of 20.6%7.2% as compared to 1,070850 homes in backlog at December 31, 2023,2024. with aThe total value of $351.2our million,backlog was $283.7 million as of December 31, 2025 as compared to $400.8$351.2 million atas of December 31, 2023.2024. Backlog dollar value decreased 19.2% due to the decrease in the number of backlog units, and was partially offset by a 10.3% increase in the average sales price of backlog units,units largelydecreased 13.0% generally due to mix.higher incentives and mix within individual communities.
Our liquidity, consisting of our cash and cash equivalents, cash held in escrow and current capacity on our revolving line of credit availability,credit, was $1.1 billion as of December 31, 2025, compared to $918.0 million as of December 31, 2024, compared to $1.1 billion as of December 31, 2023.2024.
Our principal uses of capital for the year ended December 31, 20242025 were our land purchases, land development, home construction, the acquisitionconstruction of Angliamulti-family andrental Landmark,properties, sharestock repurchases, dividends, and the payment of routine liabilities.
Cash flows for each of our communities depend on the stage in the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, entitlements and other approvals, and construction of model homes, roads, utilities, general landscaping and other amenities. Because these costs are a component of our inventory and not recognized in our consolidated statements of operations until a home closes, we incur significant cash outlays prior to our recognition of earnings. In the later stages of community development, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflow associated with home and land construction was previously incurred. From a liquidity standpoint, we continue to acquire and develop lots in our markets when they meet our current investment criteria. During the year ended December 31, 2025, we reduced our lot pipeline by terminating certain contracts in our markets that no longer met our investment criteria, in light of current market conditions, in order to maintain a balance between the number of owned lots as compared to lots we control through option and other contracts. Further, finished lots and land under development comprised 43% and 32%, respectively, of our owned land inventory, concentrating a large portion of our land inventory near monetization.
We use funds generated by operations, available borrowings under our revolving line of credit, and proceeds from issuances of debt or equity to fund our short-term working capital obligations and fund our purchases of land, as well as land development, home construction activities, and other cash needs. We had $135.5$51.5 million of borrowings outstanding under our revolving line of credit as of December 31, 2024,2025, as compared to no$135.5 amountsmillion outstanding as of December 31, 2023. This increase in borrowings was primarily driven by an increased community count and an increase in our investment in homes under construction during 2024, as well as our acquisitions of Anglia and Landmark.2024.
Our Financial Services operations use funds generated from operations,operations and availability under our mortgage repurchase facilities to finance its operations, including originations of mortgage loans to our homebuyers.
We believe that we will be able to fund our current liquidity needs for at least the next twelve12 months with our cash on hand, anticipated cash generated from operations, and cash expected to be available from our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available or on acceptable terms based on the macro-economy and market conditions at the time. In a higher interest rate environment, we may incur additional interest expense on borrowings that bear floating interest rates, such as under our revolving line of credit.credit, repurchase facilities, and construction loan agreements. We believe we are well positioned from a cash and liquidity standpoint to operate in an uncertain environment and to pursue other ways to properly deploy capital to enhance returns, which may include taking advantage of strategic opportunities as they arise.
Beyond the next twelve12 months, we believe that our principal uses of capital will be land and inventory purchases and other expenditures, as well as principal and interest payments on our long-term debt obligations. We believe that we will be able to fund our long-term liquidity needs with anticipated cash generated from operations and cash expected to be available from our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available, or on favorable terms, especially if interest rates remain high. In a higher interest rate environment, we may incur additional interest expense on borrowings that bear floating interest rates, such as under our revolving line of credit, repurchase facilities, and construction loan agreements. To the extent these sources of capital are insufficient to meet our needs, we may also conduct additional public or private offerings of our securities, refinance debt, or dispose of certain assets to fund our operating activities and capital needs.
In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future.future in addition to our outstanding debt obligations and debt service requirements. These obligations impact our short-term and long-term liquidity and capital resource needs. Our contractual obligations as of December 31, 20242025 were as follows (in thousands):
We strive to strategically manage our lot pipeline, while selectively reducing our lot pipeline by terminating certain contracts in markets that do not meet our investment criteria, in light of current market conditions, in order to maintain a balance between the number of owned lots as compared to lots we control through option and other contracts. This balance allows us flexibility to adjust to market conditions as they develop. As of December 31, 2024,2025, we had outstanding purchase contracts and option contracts for 44,876an aggregate of 26,116 lots totaling approximately $2.7$1.8 billion and we had $92.5an aggregate of $92.1 million of deposits for land contracts, of which $54.7$74.2 million were non-refundable cash deposits pertaining to land contracts. For contracts for which cash deposits were non-refundable, and subject to the terms of the outstanding contracts continuing to meet our investment criteria, we currently anticipate performing on the majority of our purchase and option contracts during the next 24 months. Our performance, including the timing and amount of purchase, if any, under these outstanding purchase and option contracts is subject to change and dependent on future market conditions. Our utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to financial intermediaries to finance the development of optioned lots, general housing market conditions, and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more or less prevalent in certain geographic regions.
(1)The carrying value of the senior notes reflects the impact of premiums,premiums discounts,and/or discounts (if applicable), and issuance costs that are amortized to interest cost over the respective terms of the senior notes.
(2)As of December 31, 2024, other financing obligations included $11.0 million related to insurance premium notes and certain secured borrowings, as well as $102.4 million outstanding under construction loan agreements, as described below. As of December 31, 2023, other financing obligations included $24.7 million related to insurance premium notes and certain secured borrowings, as well as $44.9 million outstanding under construction loan agreements.
(2)As of December 31, 2025, other financing obligations included $21.5 million related to insurance premium notes and certain secured borrowings, as well as $90.3 million outstanding under construction loan agreements related to Century Living. As of December 31, 2024, other financing obligations included $11.0 million related to insurance premium notes, as well as $102.4 million outstanding under construction loan agreements We may from time to time seek to refinance or increase our outstanding debt or retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactionstransactions, redemptions or otherwise. Such repurchasesrepurchases, exchanges or exchanges,redemptions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may or may not be material during any particular reporting period.
What changed in the latest 10-Q
Risk Factors
New heading “Since many of our homebuyers require mortgage financing, the sale of our homes is dependent upon the availability of affordable mortgage financing.”
New heading “Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses, and limit our homebuilding and other activities, which could adversely affect our operating results.”
Largest changes
“Since the federal government plays a significant role in the mortgage market through Fannie Mae, Freddie Mac, the FHA and the VA, changes to these programs, such as stricter underwriting standards, higher insurance premiums, lower loan limits, or potential restructuring, privatization or elimination of Fannie Mae or Freddie Mac, could reduce liquidity in the mortgage market and limit the availability or increase the cost of long-term, fixed-rate loans. …”see in full comparison
“Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses, and limit our homebuilding and other activities, which could adversely affect our operating results.”see in full comparison
“Since many of our homebuyers require mortgage financing, the sale of our homes is dependent upon the availability of affordable mortgage financing.”see in full comparison
“There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that was filed with the SEC on January 29, 2026 (which we refer to as our “2025 Form 10-K”), other than: (i) the revised inflation risk factor below which supersedes and replaces in its entirety the inflation risk factor in our 2025 Form 10-K; (ii) the revised mortgage financing risk factor below which supersedes and replaces in its entirety the mortgage financing risk factor in our 2025 Form 10-K; …”see in full comparison
“In July 2026, the 21st Century ROAD to Housing Act became law. Because many provisions of the legislation require agency rulemaking, regulatory guidance, interpretation, or action by state and local governmental authorities, the ultimate impact of the Act remains uncertain. Changes resulting from the Act could affect land development and entitlement activities, permitting timelines, environmental compliance requirements, construction and mortgage financing, housing demand, and the competitive landscape. …”see in full comparison
“In periods of elevated interest rates, an increasing number of homebuyers may utilize adjustable-rate mortgage loans, or ARMs, to improve affordability. Increased reliance on ARMs may make demand for our homes more sensitive to changes in interest rates, mortgage product availability and lender underwriting standards. Any such developments could negatively impact our home sales, cancellation rates, financial condition and results of operations.”see in full comparison
Full comparison: every changed paragraph (9)
There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that was filed with the SEC on January 29, 2026 (which we refer to as our “2025 Form 10-K”), other than: (i) the revised inflation risk factor below which supersedes and replaces in its entirety the inflation risk factor in our 2025 Form 10-K; (ii) the revised mortgage financing risk factor below which supersedes and replaces in its entirety the mortgage financing risk factor in our 2025 Form 10-K; and (iii) the revised fourth paragraph to the governmental regulation risk factor entitled “Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses, and limit our homebuilding and other activities, which could adversely affect our operating results” which disclosure below supersedes and replaces the fourth paragraph to such risk factor in our 2025 Form 10-K:
There have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that was filed with the SEC on January 29, 2026, other than the revised risk factor below:
Further, recent geopolitical developments, including the conflict in the Middle East, have contributed to volatility in global energy markets and increases in fuel and transportation costs,costs during the first six months of 2026, which may further heighten inflationary pressures, especially if the conflict intensifies or persists. Sustained or worsening geopolitical instability could result in higher input costs, supply chain disruptions, and reduced consumer confidence, which, when combined with affordability pressures and elevated interest rates, could cause potential homebuyers to delay or reconsider home purchases, adversely affecting demand for our homes and our operating results.
Since many of our homebuyers require mortgage financing, the sale of our homes is dependent upon the availability of affordable mortgage financing.
Our home sales depend on homebuyers' ability to obtain affordable mortgage financing. Reduced mortgage availability, tighter lending standards, and higher interest rates or other financing costs, particularly for first-time homebuyers, which is an important customer segment for us, could significantly reduce demand for our homes and negatively impact our business and operating results.
In periods of elevated interest rates, an increasing number of homebuyers may utilize adjustable-rate mortgage loans, or ARMs, to improve affordability. Increased reliance on ARMs may make demand for our homes more sensitive to changes in interest rates, mortgage product availability and lender underwriting standards. Any such developments could negatively impact our home sales, cancellation rates, financial condition and results of operations.
Since the federal government plays a significant role in the mortgage market through Fannie Mae, Freddie Mac, the FHA and the VA, changes to these programs, such as stricter underwriting standards, higher insurance premiums, lower loan limits, or potential restructuring, privatization or elimination of Fannie Mae or Freddie Mac, could reduce liquidity in the mortgage market and limit the availability or increase the cost of long-term, fixed-rate loans. Any such changes could adversely affect interest rates, mortgage availability, and our home sales, and could increase the extent to which buyers rely on ARMs or other mortgage products that may expose them to future payment increases. Past periods of mortgage-market instability have shown that tightened credit standards, reduced investor appetite for mortgage-backed securities, and the elimination of certain loan products can materially reduce the pool of qualified buyers, especially first-time and move-up purchasers. Similar conditions in the future, including changes to federal programs or tax policies, deterioration in the market for mortgage-backed securities, reduced liquidity for ARM or other mortgage products, or other systemic disruptions in the broader mortgage market, could again depress demand for our homes. Additionally, since many homebuyers must sell existing homes to purchase new ones, limited mortgage financing, higher financing costs or increased mortgage payment burdens could delay or prevent closings, adversely affecting our business and operating results.
Government regulations and legal challenges may delay the start or completion of our communities, increase our expenses, and limit our homebuilding and other activities, which could adversely affect our operating results.
In July 2026, the 21st Century ROAD to Housing Act became law. Because many provisions of the legislation require agency rulemaking, regulatory guidance, interpretation, or action by state and local governmental authorities, the ultimate impact of the Act remains uncertain. Changes resulting from the Act could affect land development and entitlement activities, permitting timelines, environmental compliance requirements, construction and mortgage financing, housing demand, and the competitive landscape. We cannot predict the timing, scope, or magnitude of any favorable or unfavorable impacts, and the implementation of the Act could materially affect our business, financial condition, results of operations, cash flows, liquidity, or growth strategy.
Management's Discussion & Analysis (MD&A)
Largest changes
During the three and six months endedsee in full comparisonMarchJune31,30, 2026, our Southeast segment generated income before income tax expense of$19.4$11.4 million and $30.8 million,representingrespectively.an increase of 36.8% fromFor thepriorthree-monthyearcomparison,period,incomewhichbeforewasincomeprimarilytaxdrivenexpensebyremainedincreasedrelativelyrevenueconsistent,andincreasingpartially offset by a decrease in homebuilding gross margin. During the three months ended March 31, 2026, revenue increased $22.2 million2.2% as compared to the respective prior year period. For the six-month comparison, income before income tax expense increased 21.5% as compared to the respective prior year period, primarily driven by a$32.5 millionlandsalessale transaction in Georgiareflectedduring the first quarter of 2026. Revenue decreased $33.7 million and $11.5 million, respectively, during the three and six months ended June 30, 2026 aslandcomparedsalesto the respective prior year periods, primarily driven by decreases of 9.7% andother3.8%,revenue, as well as a 4.0% increaserespectively, in the number of homesdelivered,delivered andpartiallydecreasesoffsetofby10.9%anand11.2%10.9%,decreaserespectively, in the average sales price per home. Theincreasedecrease in revenue for the six-month comparison was partially offset by the first quarter land sale transaction of $32.5 million included in land sales and other revenue. The decreases in the number of homes deliveredwaswere primarily driven byimprovedaabsorptionlowerratesaverage number of selling communities, and the decreases in average sales price per homedecreaseresultedwas driven byfrom increased use of incentives. During the three and six months endedMarchJune31,30, 2026, homebuilding gross margindecreasedpercentage increased from the respective prior yearperiod,periods,duedrivenprimarilybytolower direct construction costs and the absence of prior period impairment charges of $3.8 million, and was partially offset by the impact of increased use of incentives as compared to the respective prior yearperiod.periods.
During the three and six months endedsee in full comparisonMarchJune31,30, 2026, our Century Complete segment generated income before income tax expense of$13.6$20.8 million and $34.4 million, respectively, representinga decreaseincreases of1.8%38.8%comparedandto19.3%,the prior year period, which was primarily driven by a decrease in revenue. During the three months ended March 31, 2026, revenue decreased $19.7 millionrespectively, as compared to the respective prior yearperiod,periods. These increases were primarily driven byaincreases10.9%indecreasehomebuilding gross margin percentage. During the three and six months ended June 30, 2026, revenue decreased $24.2 million and $43.9 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 7.9% and 9.2%, respectively, in the number of homes delivered andpartiallydecreasesoffsetofby2.1%aand1.6%0.5%,increaserespectively, in the average sales price per home. Thedecreasedecreases in the number of homes deliveredwaswere primarily driven bysloweraabsorptionlowerratesaverage number of selling communities and the decreases in average sales price per homeincreaseresultedwas driven by the mix of deliveries within individual communities and partially offset byfrom increased use of incentives. During the three and six months endedMarchJune31,30, 2026, homebuilding gross margin percentage increased from the respective prior yearperiod,periods, driven by lower direct construction costs and themixabsence ofdeliveriespriorwithinperiodindividualimpairmentcommunities,charges of $3.6 million and $4.0 million, respectively, and was partially offset by increased use of incentives as compared to the respective prior yearperiod.periods.
Homebuilding gross margin represents home sales revenues less cost of home sales revenues. Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues,see in full comparisondecreasedincreased to17.8%18.1% for the three months endedMarchJune31,30,2026,2026asfromcompared17.6% for the prior year period and decreased to19.9%18.0% for the six months ended June 30, 2026 from 18.7% for the period year period. The increase for the three-month comparison was primarily driven by lower direct construction costs and the absence of prior period impairment charges, and was partially offset by increased use of incentives during the three months endedMarchJune31,30,2025.2026. The decrease for the six-month comparison was primarily driven by increased use of incentives during thethreesix months endedMarchJune31,30, 2026 as compared to the same respective prior year period.
Market conditions in the homebuilding industry have continued to be impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, cautious homebuyer sentiment, and ongoing affordability pressures for homebuyers. Against this backdrop,see in full comparisonincluding volatility in fuel and transportation prices related to the global conflict in the Middle East, we experienced softened demand during the three months ended March 31, 2026, as net new home contracts (new home contracts net of cancellations) decreased 11.6% compared to the prior year period. Still,there remains an underlying need for affordable new homes, supported by solid demographic trends and an ongoing undersupply of homes. Demand for our homes improved during the three months ended June 30, 2026, as net new home contracts (new home contracts net of cancellations) increased modestly compared to the prior year period. In response to market conditions, we have continued to provide, when necessary, incentive offerings across our communities, including discounts on base home prices, lot premiums, options and upgrades, and financing incentives, including interest rate buydowns and closing cost concessions. Further, during the firstquartersix months of 2026, we experienced continued acceptance to adjustable-rate mortgages among ourhomebuyers.homebuyers,Duringwhich adjustable-rate mortgages accounted for nearly 35% of thethreemortgagesmonthsthatendedweMarchoriginated31,by volume of principal during second quarter of 2026,cycleantimesincreaseremainedfrominfirstthequarter 2026 levels of approximatelythree-30%toandfour-monthwelltimeframe.above first quarter 2025 levels of less than 5%.
In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future in addition to our outstanding debt obligations and debt service requirements described below. These obligations impact our short-term and long-term liquidity and capital resource needs. For the three and six months endedsee in full comparisonMarchJune31,30, 2026, there were no material changes to the contractual obligations we previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that was filed with the SEC on January 29,2026.2026, other than an increase in borrowings under our line of credit as of June 30, 2026 to $329.6 million, as compared to $51.5 million as of December 31, 2025, which borrowings are subject to variable interest rates.
Cash Flows—see in full comparisonThreeSix Months EndedMarchJune31,30, 2026 Compared to theThreeSix Months EndedMarchJune31,30, 2025
Full comparison: every changed paragraph (70)
the cyclical nature of the homebuilding industry, which is particularly susceptible to economic changes, either nationally or in the regional and local markets in which we operate, including changescontinued elevated and any future increases in interest rates and the resulting impact on the accessibility and cost of mortgage loans to homebuyers,homebuyers; persistent inflation,inflation; decreased employment levels and job insecurity concerns due in part to the rapid adoption of artificial intelligence,intelligence; cautious consumer sentiment,sentiment; affordability concerns,concerns; and increased recessionary conditions;
unstable economic and political conditions as well as geopolitical conflicts, including most recently in the Middle East, which have adversely affected and could continue to adversely affect our supply chain by causing shortages or increases in costs for materials necessary to construct homes and/or increases to the price of gasoline and other fuels, and cause higher interest rates, inflation, reduced consumer confidence, general economic uncertainty, and/or other adverse effects;
a downturn in the homebuilding industry, including a reduction in demand for our homes, increased cancellation rates, or a decline in real estate values or market conditions resulting in an adverse impact on our business, operating results and financial condition, which may include ana continued elevated use of sales incentives adversely affecting our margins and possible future impairment or restructuring charges;
changes in assumptions used to make industry forecasts, population growth or decline rates, or trends affecting housing availability, demand or prices;
the degree and nature of our competition, including the supply and pricing of new and existing homes and other housing alternatives, and recent consolidation within the homebuilding industry, and the effect on our business and operating results;
changes in, or the failure or inability to comply with, governmental laws and regulations and the evolving nature of such laws and regulations;
availability, terms and deployment of our capital and possible challenges to our capital allocation;
taxation and tax policy changes, tax rate changes, new tax laws, or new or revised tax law interpretations or guidance; and the effect of a public health issue, such as a major epidemic or pandemic on the economy and our business.
the effect of recent federal housing legislation; and
the effect of a public health issue, such as a major epidemic or pandemic, on the economy and our business.
While we offer homes that appeal to a broad range of entry-level, move-up, and lifestyle homebuyers, our offerings are heavily weighted towards providing affordable housing options in each of our homebuyer segments. Additionally, we prefer building move-in-ready homes over built-to-order homes, which we believe allows for a faster construction process, advantageous pricing with subcontractors, and shortened time period from home sale to home delivery, thus allowing our customers greater certainty on their financing and allowing us to more appropriately price the homes and deploy our capital. Of the 2,0134,519 homes delivered during the first threesix months of 2026, approximately 96% of homes delivered had purchase prices below the Federal Housing Administration-insured mortgage limits and approximately 98% of homes delivered were built as move-in ready homes.
Market conditions in the homebuilding industry have continued to be impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, cautious homebuyer sentiment, and ongoing affordability pressures for homebuyers. Against this backdrop, including volatility in fuel and transportation prices related to the global conflict in the Middle East, we experienced softened demand during the three months ended March 31, 2026, as net new home contracts (new home contracts net of cancellations) decreased 11.6% compared to the prior year period. Still, there remains an underlying need for affordable new homes, supported by solid demographic trends and an ongoing undersupply of homes. Demand for our homes improved during the three months ended June 30, 2026, as net new home contracts (new home contracts net of cancellations) increased modestly compared to the prior year period. In response to market conditions, we have continued to provide, when necessary, incentive offerings across our communities, including discounts on base home prices, lot premiums, options and upgrades, and financing incentives, including interest rate buydowns and closing cost concessions. Further, during the first quartersix months of 2026, we experienced continued acceptance to adjustable-rate mortgages among our homebuyers.homebuyers, Duringwhich adjustable-rate mortgages accounted for nearly 35% of the threemortgages monthsthat endedwe Marchoriginated 31,by volume of principal during second quarter of 2026, cyclean timesincrease remainedfrom infirst thequarter 2026 levels of approximately three-30% toand four-monthwell timeframe.above first quarter 2025 levels of less than 5%.
We anticipate the homebuilding markets in each of our operating segments will continue to be tied to both the macro-economic environment and the local economy, and we expect our operating strategy will continue to adapt to market changes, though we cannot provide any assurance that our strategies will remain consistent or continue to be successful. We believe future demand for our homes remains uncertain as future economic, market and geopolitical conditions remain uncertain, in particular with respect to inflation and consumer confidence, both of which couldhave been and may continue to be adversely affected by the conflict in the Middle East, especially if it persists or intensifies; continued elevated interest rates and the impact of potential future increases or decreases to the U.S. Federal funds interest rate by the U.S. Federal Reserve; interest rates; availability and cost of mortgage loans to homebuyers; financial, credit and mortgage markets; the extent to which and how long government monetary directives and actions will impact the U.S. economy; the effect of significant new tariffs and/or duties; consumer confidence; wage growth; household formations; levels of new and existing homes for sale; prevailing home and rental prices; availability and cost of land, labor and construction materials; demographic trends; housing demand; increased energy and fuel prices; the possibility of an economic recession; the effects of full or partial U.S. governmental shutdowns; and other factors, including those described elsewhere in this Form 10-Q. Specifically, changes in mortgage interest rates impact the costs of owning a home and affect the purchasing power of our customers and could impact homebuyer confidence. Changes in demand for our homes or cancellations due to mortgage interest rates, consumer confidence, or otherwise, could affect our operating results in future periods, including our net sales, home deliveries, gross margin, origination volume of loans and revenues from our Financial Services segment, and net income.
Recent disruptionsDisruptions to energy markets related to geopolitical developments in the Middle East have increased fuel and transportation prices, and certain tariffs that became effective in late 2025 relate to various imported products used in the homebuilding industry, including cabinets, lumber, and certain other wood products. As of MarchJune 31,30, 2026, we have not experienced significant cost increases or supply chain disruptions for raw materials and construction cycle times remained approximately three to four months during the first six months of 2026; however, we could experience increases in the costs of materials utilized for the construction of our homes and/or supply chain disruptions that, in turn, would impact our business and our consolidated financial statements in future reporting periods. Mortgage rates remained elevated during the quarterfirst six months of 2026 and are influenced by a range of market factors, and we cannot provide any assurance as to the impact of future market or policy developments on mortgage rates or our current or future business. Further, in July 2026, a broad package of federal policymakers have engaged with industry participants on housing affordabilityprovisions andbecame supply issues,law, though the timing and impactmagnitude of any resultingimpact legislativeon or policy actions remain uncertain and are not expected to materially affectthe housing market conditions inremains the near term.uncertain. The potential extent and effect of these and other factors on our business is highly uncertain and outside our control, and our past performance may not be indicative of our future results.
During the three and six months ended MarchJune 31,30, 2026, we generated $33.3$49.1 million and $82.4 million in income before income tax expense, as compared to $52.5$47.1 million and $99.6 million in the respective prior year period.periods. During the three and six months ended MarchJune 31,30, 2026, we generated net income of $24.4 million, or $0.84 per diluted share, as compared to $39.4$36.1 million, or $1.26 per diluted share, and $60.6 million, or $2.09 per diluted share, respectively, as compared to $34.9 million, or $1.14 per diluted share, and $74.2 million, or $2.40 per diluted share in the respective prior year period.periods.
During the three and six months ended MarchJune 31,30, 2026, we generated total revenues of $789.7$927.2 million, including land salesmillion and other$1.7 revenuesbillion, of $33.2 million,respectively, as compared to $903.2$1.0 millionbillion and $1.9 billion in the respective prior year period.periods. During the three and six months ended MarchJune 31,30, 2026, we delivered 2,0132,506 and 4,519 new homes with an average sales price of $364.7$358.2 thousand.thousand and $361.1 thousand, respectively. Our new home deliveries decreased by 11.9%3.1% and 7.2%, respectively, as compared to the respective prior year period,periods, primarily due to slower absorption rates as a result of lower demand amid challenging homebuilding market conditions, and the average sales price per new home decreased 5.7%5.1% and 5.4% as compared to the respective prior year period,periods, primarily due to an increased use of incentives during the firstthree quarterand ofsix months ended June 30, 2026. DuringFor the three months ended MarchJune 31,30, 2026, net new contracts increased 2.7% to 2,615, and for the six months ended June 30, 2026, net new contracts decreased 11.6%4.7% to 2,3794,994, asin each case compared to the prior year period.
We continuehave continued to take a balanced approach to capital allocation, guided by market conditions and our priorities of investing in land and land development to support anticipated future growth and returning capital to our stockholders. We ended the firstsecond quarter of 2026 with $78.2$92.3 million of cash and cash equivalents and $11.6$39.7 million of cash held in escrow. We had $203.7$329.6 million outstanding under our revolving line of credit, with a homebuilding debt to capital ratio of 32.2%34.2% and a net homebuilding debt to net capital ratio of 30.5%.31.9%. We have continued to strategically manage our lot pipeline in order to maintain a balance between the number of owned lots as compared to lots we control through option and other contracts, resulting in 58,53760,128 lots owned and controlled at MarchJune 31,30, 2026. During the three and six months ended MarchJune 31,30, 2026, we repurchased an aggregate of 617.1352.8 thousand sharesand 969.9 thousand shares, respectively, under our stock repurchase program for a total purchase price of approximately $40.0$19.6 million and $59.6 million, respectively, and a weighted average per share price of $64.82$55.54 perand share.$61.44, Alsorespectively. Also, during each of the first quarter,two quarters of 2026, we paid a quarterly cash dividend to our stockholders of $0.32 per share, a 10% increase from the $0.29 per share quarterly dividend paid during each of the threefirst monthstwo endedquarters March 31,of 2025.
For the three and six months ended MarchJune 31,30, 2026, our Financial Services segment generated income before income tax expense of $7.6$9.9 million and $17.5 million, respectively, as compared to $2.4$6.2 million and $8.6 million in the respective prior year period, primarily driven by favorable fair value adjustments during the period.periods. During the three months ended MarchJune 31,30, 2026, the number of mortgages originated increased 0.9%, and during the six months ended June 30, 2026, the number of mortgages originated decreased 7.4%2.9%, in each case, as compared to the prior year period. During the three and six months ended June 30, 2026, the number of loans sold to third parties increaseddecreased 2.2%6.9% and 2.6%, respectively, as compared to the respective prior year period.periods.
The following table summarizes our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025:
(3)Beginning in the third quarter of 2025, we added “Abandonment of lot option contracts” as an adjustment in our non-GAAP adjusted EBITDA (Earnings Before Interest, Depreciation, and Amortization) and adjusted net income calculations, and we have recast the corresponding prior year period adjusted EBITDA and adjusted net income amounts to conform to the current presentation and calculation.
During the three and six months ended MarchJune 31,30, 2026, our West segment generated income before income tax expense of $9.9$10.1 million and $20.1 million, respectively, representing a decreasedecreases of 53.5%59.5% and 56.7%, respectively, as compared to the respective prior year period,periods. whichThese wasdecreases were primarily driven by a decreasedecreases in revenue and homebuilding gross margin.margin percentage. During the three and six months ended MarchJune 31,30, 2026, revenue decreased $24.2$18.6 million and $42.8 million, respectively, as compared to the respective prior year period,periods, primarily driven by andecreases 8.6%of decrease3.9% and 6.1%, respectively, in the number of homes delivered and adecreases 5.2%of decrease5.6% and 5.4%, respectively, in the average sales price per home. The decreasedecreases in the number of homes delivered waswere primarily drivenattributable byto slower absorption rates and the decreases in average sales price per home decreaseresulted was driven byfrom increased use of incentives. During the three and six months ended MarchJune 31,30, 2026, homebuilding gross margin percentage decreased from the respective prior year period,periods, due primarily to increased use of incentives as compared to the respective prior year period.periods.
During the three and six months ended MarchJune 31,30, 2026, our Mountain segment generated income before income tax expense of $8.8$13.5 million and $22.2 million, respectively, representing a decreasedecreases of 62.6%11.0% and 42.4%, respectively, as compared to the respective prior year period,periods. whichThese wasdecreases were primarily driven by a decreasedecreases in revenue and homebuilding gross margin.margin Duringpercentage. For the threethree-month months ended March 31, 2026,comparison, revenue decreased $64.8$8.1 million as compared to the prior year period, primarily drivendue by a 19.8% decrease in the number of homes delivered andto an 11.2%8.5% decrease in the average sales price per home.home Theresulting decreasefrom increased use of incentives, partially offset by a 5.1% increase in the number of homes delivered wasattributable to improved absorption rates. For the six-month comparison, revenue decreased $73.0 million compared to the prior year period, primarily drivendue byto a 7.9% decline in homes delivered as a result of slower absorption ratesrates, andas well as a 9.8% decrease in the average sales price per home decrease was driven by increased use of incentives. During the three and six months ended MarchJune 31,30, 2026, homebuilding gross margin percentage decreased from the respective prior year period,periods, due primarily to increased use of incentives as compared to the prior year period.periods.
During the three and six months ended MarchJune 31,30, 2026, our Texas segment generated income before income tax expense of $2.8$10.5 million and $13.3 million, representingrespectively. For the three-month comparison, income before income tax expense increased 29.3% as compared to the prior year period, which was primarily driven by an increase in revenue and homebuilding gross margin percentage. For the three-month comparison, revenue increased $9.4 million compared to the prior year period, primarily due to a decrease5.2% increase in homes delivered, driven by a higher average number of 72.9%selling communities, and partially offset by a 1.2% decrease in the average sales price per home resulting from increased use of incentives. During the three months ended June 30, 2026, homebuilding gross margin percentage increased from the prior year period, driven by lower direct construction costs, and partially offset by increased use of incentives as compared to the prior year period. For the six-month comparison, income before income tax expense decreased 27.9% as compared to the prior year period, which was primarily driven by a decrease in revenue and homebuilding gross margin.margin Duringpercentage. For the threesix-month months ended March 31, 2026,comparison, revenue decreased $30.9$21.5 million as compared to the prior year period, primarily drivendue byto ana 18.8%6.3% decreasedecline in the number of homes delivered andas a 4.8%result of slower absorption rates, as well as a 2.8% decrease in the average sales price per home. The decrease in the number of homes delivered was primarily driven by slower absorption rates and the average sales price per home decrease was driven by increased use of incentives. During the threesix months ended MarchJune 31,30, 2026, homebuilding gross margin percentage decreased from the prior year period, due primarily to increased use of incentives as compared to the prior year period.
During the three and six months ended MarchJune 31,30, 2026, our Southeast segment generated income before income tax expense of $19.4$11.4 million and $30.8 million, representingrespectively. an increase of 36.8% fromFor the priorthree-month yearcomparison, period,income whichbefore wasincome primarilytax drivenexpense byremained increasedrelatively revenueconsistent, andincreasing partially offset by a decrease in homebuilding gross margin. During the three months ended March 31, 2026, revenue increased $22.2 million2.2% as compared to the respective prior year period. For the six-month comparison, income before income tax expense increased 21.5% as compared to the respective prior year period, primarily driven by a $32.5 million land salessale transaction in Georgia reflectedduring the first quarter of 2026. Revenue decreased $33.7 million and $11.5 million, respectively, during the three and six months ended June 30, 2026 as landcompared salesto the respective prior year periods, primarily driven by decreases of 9.7% and other3.8%, revenue, as well as a 4.0% increaserespectively, in the number of homes delivered,delivered and partiallydecreases offsetof by10.9% anand 11.2%10.9%, decreaserespectively, in the average sales price per home. The increasedecrease in revenue for the six-month comparison was partially offset by the first quarter land sale transaction of $32.5 million included in land sales and other revenue. The decreases in the number of homes delivered waswere primarily driven by improveda absorptionlower ratesaverage number of selling communities, and the decreases in average sales price per home decreaseresulted was driven byfrom increased use of incentives. During the three and six months ended MarchJune 31,30, 2026, homebuilding gross margin decreasedpercentage increased from the respective prior year period,periods, duedriven primarilyby tolower direct construction costs and the absence of prior period impairment charges of $3.8 million, and was partially offset by the impact of increased use of incentives as compared to the respective prior year period.periods.
During the three and six months ended MarchJune 31,30, 2026, our Century Complete segment generated income before income tax expense of $13.6$20.8 million and $34.4 million, respectively, representing a decreaseincreases of 1.8%38.8% comparedand to19.3%, the prior year period, which was primarily driven by a decrease in revenue. During the three months ended March 31, 2026, revenue decreased $19.7 millionrespectively, as compared to the respective prior year period,periods. These increases were primarily driven by aincreases 10.9%in decreasehomebuilding gross margin percentage. During the three and six months ended June 30, 2026, revenue decreased $24.2 million and $43.9 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 7.9% and 9.2%, respectively, in the number of homes delivered and partiallydecreases offsetof by2.1% aand 1.6%0.5%, increaserespectively, in the average sales price per home. The decreasedecreases in the number of homes delivered waswere primarily driven by slowera absorptionlower ratesaverage number of selling communities and the decreases in average sales price per home increaseresulted was driven by the mix of deliveries within individual communities and partially offset byfrom increased use of incentives. During the three and six months ended MarchJune 31,30, 2026, homebuilding gross margin percentage increased from the respective prior year period,periods, driven by lower direct construction costs and the mixabsence of deliveriesprior withinperiod individualimpairment communities,charges of $3.6 million and $4.0 million, respectively, and was partially offset by increased use of incentives as compared to the respective prior year period.periods.
Our Financial Services segment originates mortgages for primarily our homebuyers, and as such, the volume of loans originated typically correlates to our number of homes delivered. Fluctuations in financial services income before income tax may occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. For the three and six months ended MarchJune 31,30, 2026, our Financial Services segment generated income before income tax expense of $7.6$9.9 million and $17.5 million, respectively, as compared to $2.4$6.2 million and $8.6 million, respectively, in the respective prior year period,periods. For the three-month comparison, the increase was primarily drivenattributable byto favorable fair value adjustments related to our derivativelocked instrumentsloan pipeline and hedge activity, partially offset by the benefit recognized from the sale of our mortgage servicing rights portfolio in the prior year period. For the six-month comparison, the increase was primarily attributable to favorable fair value adjustments related to our locked loan pipeline and hedge activity and mortgage servicing rights portfolio.portfolio, partially offset by the benefit recognized from the sale of our mortgage servicing rights portfolio in the prior year period. During the three months ended MarchJune 31,30, 2026, the number of mortgages originated increased 0.9%, and during the six months ended June 30, 2026, the number of mortgages originated decreased 7.4%2.9%, in each case, as compared to the respective prior year period. During the three and six months ended June 30, 2026, the number of loans sold to third parties increaseddecreased 2.2%6.9% and 2.6%, respectively, as compared to the respective prior year period.periods.
Our Century Living operations are engaged in the development, construction, management, and sales of multi-family rental properties, currently all located in Colorado. For the three and six months ended MarchJune 31,30, 2026, our Century Living segment generated losses before income tax expense of $115 thousand and $48 thousand, respectively, as compared to income before income tax expense of $67.0 thousand as compared to a loss of $1.4$1.5 million and $34 thousand, respectively, in the respective prior year period,periods. As of MarchJune 31,30, 2026, the Company had three multi-family rental properties in Colorado, of which two were available for leasing. TheseAs of June 30, 2026, these three projects representrepresented nearly 870 total multi-family units, including 443 under development and active construction and 425 completed units, ofand which 357417 units were leased as of March 31, 2026.leased. As of MarchJune 31,30, 2025, we had three multi-family rental propertiesproperties, one of which was completed and two of which were under active construction,construction. andWe subsequently sold one multi-family rental property during the fourth quarter of 2025.
During the three and six months ended MarchJune 31,30, 2026, our Corporate segment generated a losslosses of $28.9$27.0 million and $55.9 million, respectively, as compared to a losslosses of $31.6$35.0 million and $66.6 million, respectively, during the respective prior year period.periods. TheFor the three-month comparison, the decrease was primarily related to decreased compensation costs during the three months ended June 30, 2026. For the six-month comparison, the decrease was primarily related to decreased compensation costs during the six months ended June 30, 2026 and $1.5 million in restructuring costs recognized during the threesix months ended MarchJune 31,30, 2025.
Homebuilding gross margin represents home sales revenues less cost of home sales revenues. Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, decreasedincreased to 17.8%18.1% for the three months ended MarchJune 31,30, 2026,2026 asfrom compared17.6% for the prior year period and decreased to 19.9%18.0% for the six months ended June 30, 2026 from 18.7% for the period year period. The increase for the three-month comparison was primarily driven by lower direct construction costs and the absence of prior period impairment charges, and was partially offset by increased use of incentives during the three months ended MarchJune 31,30, 2025.2026. The decrease for the six-month comparison was primarily driven by increased use of incentives during the threesix months ended MarchJune 31,30, 2026 as compared to the same respective prior year period.
For the three and six months ended MarchJune 31,30, 2026, our adjusted homebuilding gross margin percentagepercentage, excluding inventory impairment, interest in cost of home sales revenues, and purchase price accounting for acquired work in process inventoryinventory, was 19.7%20.0% and 19.8%, respectively, as compared to 21.6%20.0% and 20.8%, respectively, for the priorsame yearrespective period.periods in 2025. We believe the above non-GAAP adjusted homebuilding gross margin information is meaningful as it isolates the impact that inventory impairment, indebtedness, and acquisitions (in each case as applicable) during any period, have on our homebuilding gross margin and allows for comparability of our homebuilding gross margins to prior year periods and to homebuilding gross margins of our competitors.
Our selling, general and administrative expense decreased $4.7$1.4 million and $6.1 million, respectively, for the three and six months ended MarchJune 31,30, 2026,2026 as compared to the threesame monthsrespective endedperiods March 31,in 2025, primarily driven by decreased commissions expense and other administrative expenses, partially offset by increased advertising costs. As a percentage of home sales revenue, our selling, general and administrative expense increased 210100 basis points and 150 basis points during the three and six months ended MarchJune 31,30, 2026, respectively, driven primarily by decreased revenue on a partially fixed cost base.
For the threesix months ended MarchJune 31,30, 2026, our estimated annual rate of 26.3% was impacted by discrete items which increased our rate by 0.5%,0.2%, primarily related to a shortfall in tax deductions for stock-based compensation awards that vested during the period.
On July 4, 2025, H.R.1, the One Big Beautiful Bill Act, was signed into law, which disallows Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026. As a result, our income tax expense and effective tax rate for 2026 will not reflect a benefit from such tax credits asrelated to homes delivered after June 30, 2026.
For the three months ended MarchJune 31,30, 2026 and 2025, we recorded income tax expense of $8.9$12.9 million and $13.1$12.2 million, respectively. For the six months ended June 30, 2026 and 2025, we recorded income tax expense of $21.8 million and $25.4 million, respectively.
Total assets increased by $49.9$231.4 million, or 1.1%,5.2%, to $4.5$4.7 billion at MarchJune 31,30, 2026 as compared to December 31, 2025, primarily due to (1) changes in our inventory balances within our homebuilding segments related to the timing of home and land development construction activities,activities; (2) changes in our Century Living multi-family rental properties inventory balances related to the timing of disposition, development, and construction activities; and (3) a decrease in our Financial Services assets primarily related to a decrease in mortgage loans held for sale.
We have continued to strategically manage our lot pipeline resulting in 58,53760,128 lots owned and controlled at MarchJune 31,30, 2026, compared to 60,916 at December 31, 2025. Of our total lots owned and controlled as of MarchJune 31,30, 2026, 58.7%56.0% were owned and 41.3%44.0% were controlled, as compared to 57.1% owned and 42.9% controlled as of December 31, 2025.
Net new home contracts (new home contracts net of cancellations) for the three months ended MarchJune 31,30, 2026 decreasedincreased by 31369 homes, or 11.6%,2.7%, to 2,3792,615 as compared to 2,6922,546 for the same period in 2025. Net new home contracts (new home contracts net of cancellations) for the six months ended June 30, 2026 decreased by 244 homes, or 4.7%, to 4,994 as compared to 5,238 for the same period in 2025.
Our overall average monthly “absorption rate” (calculated as monthly net new home contracts divided by average selling communities) for the three and six months ended MarchJune 31,30, 2026 and 2025 by segment is included in the table below:
During the three months ended MarchJune 31,30, 2025,2026, our total average monthly absorption ratesrate remained flat at 2.7 per month and during the six months ended June, 30 2026, our total average monthly absorption rate decreased by 7.1% to 2.6 per monthmonth, in each case as compared to the sameprior periodyear inperiod. 2025, primarily driven by lower demand amid challenging homebuilding marketMarket conditions during the three and six months ended June 30, 2026 continued to be impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, including recent volatility in fuel and transportation prices related to the conflict in the Middle East, and broader concerns about affordability by homebuyers.
Our selling communities decreasedincreased by 23 communities to 316330 communities as of MarchJune 31,30, 2026, as compared to 318327 communities at MarchJune 31,30, 2025. This 0.6%0.9% decreaseincrease was driven by our SoutheastWest, Mountain, and CenturyTexas Complete segmentsegments as a result of new community closeoutsopenings in excess of new community openingscloseouts during the current year period.
Backlog reflects the number of homes, net of cancellations, for which we have entered into a sales contract with a customer but for which we have not yet delivered the home. As of MarchJune 31,30, 2026, we had 1,1551,264 homes in backlog, which represents aan decreaseincrease of 8.2%3.9% as compared to 1,2581,217 homes in backlog at MarchJune 31,30, 2025. The total value of our backlog was $438.5$469.3 million as of MarchJune 31,30, 2026 as compared to $521.1$466.0 million as of MarchJune 31,30, 2025. Backlog dollar value decreasedincreased 15.9%0.7% due to the decreaseincrease in the number of backlog units, and the average sales price of backlog units decreased 8.4%3.0% generally due to increased use of incentives and mix within individual communities.communities, in each case as of June 30, 2026 as compared to June 30, 2025.
Our 6.625% senior notes due 2033 (which we refer to collectively as our “2033 Notes”) and our 3.875% senior notes due 2029 (which we refer to collectively as our “2029 Notes” and collectively with our 2033 Notes, the “Senior Notes”) are our unsecured senior obligations and are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by substantially all of our direct and indirect wholly-owned operating subsidiaries (which we refer to collectively as the “Guarantors”). Our subsidiaries associated with our Financial Services operations (which we refer to as the “Non-Guarantors”) do not guarantee the Senior Notes. The guarantees are senior unsecured obligations of the Guarantors that rank equal with all existing and future senior debt of the Guarantors and senior to all existing and future subordinated debt of the Guarantors. The guarantees are effectively subordinated to any secured debt of the Guarantors. As of MarchJune 31,30, 2026, Century Communities, Inc. had $1.0 billion in total principal amount of Senior Notes outstanding.
Our liquidity, consisting of our cash and cash equivalents and cash held in escrow and current capacity under our revolving line of credit, was $886.1$802.4 million as of MarchJune 31,30, 20262026, andcompared to $1.1 billion as of December 31, 2025.
Our principal uses of capital for the three and six months ended MarchJune 31,30, 2026 were our land purchases, land development, home construction, construction of multi-family rental properties, stock repurchases, dividends, and the payment of routine liabilities.
We use funds generated by operations, available borrowings under our revolving line of credit, and proceeds from issuances of debt or equity to fund our short-term working capital obligations and our purchases of land, as well as land development, home construction activities, and other cash needs. We had $203.7$329.6 million outstanding under our revolving line of credit as of MarchJune 31,30, 2026, as compared to $51.5 million outstanding as of December 31, 2025.
In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future in addition to our outstanding debt obligations and debt service requirements described below. These obligations impact our short-term and long-term liquidity and capital resource needs. For the three and six months ended MarchJune 31,30, 2026, there were no material changes to the contractual obligations we previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that was filed with the SEC on January 29, 2026.2026, other than an increase in borrowings under our line of credit as of June 30, 2026 to $329.6 million, as compared to $51.5 million as of December 31, 2025, which borrowings are subject to variable interest rates.
We strive to strategically manage our lot pipeline, while selectively reducing our lot pipeline by terminating certain contracts in markets that do not meet our investment criteria, in light of current market conditions, in order to maintain a balance between the number of owned lots as compared to lots we control through option and other contracts. We believe this balance provides us flexibility to adjust to market conditions as they develop. As of MarchJune 31,30, 2026, we had outstanding purchase contracts and option contracts for an aggregate of 24,18426,447 lots totaling approximately $1.9$2.0 billion and we had an aggregate of $97.1$92.2 million of deposits for land contracts, of which $86.4$85.1 million were non-refundable cash deposits pertaining to land contracts. For contracts for which cash deposits were non-refundable, and subject to the terms of the outstanding contracts continuing to meet our investment criteria, we currently anticipate performing on the majority of our purchase and option contracts during the next 24 months. Our performance, including the timing and amount of purchase, if any, under these outstanding purchase and option contracts is subject to change and dependent on future market conditions. Our utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to financial intermediaries to finance the development of optioned lots, general housing market conditions, and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more or less prevalent in certain geographic regions.
In addition, in the ordinary course of business, we explore, and from time to time, enter into purchase agreements to opportunistically acquire other homebuilders to add existing and future lots to our land portfolio and augment the organic expansion of our land portfolio. These acquisitions aremay oftenbe legally structured as asset or entity acquisitions for cash and conditioned upon a due diligence investigation by us of the business for a limited period of time, in addition to other standard and customary closing conditions.
One of our principal liquidity needs is the payment of principal and interest on our outstanding indebtedness. Our outstanding indebtedness is described in detail in Note 9 – Debt in the Notes to the Condensed Consolidated Financial Statements. We are required to meet certain covenants, and as of MarchJune 31,30, 2026, we were in compliance with all such covenants and requirements under the agreements governing our senior notes, revolving line of credit, construction loan agreements, and mortgage repurchase facilities.
Our outstanding debt obligations included the following as of MarchJune 31,30, 2026 and December 31, 2025, respectively (in thousands):
(2)As of MarchJune 31,30, 2026 and December 31, 2025, other financing obligations included certain secured borrowings and insurance premium notes and certain secured borrowings,notes, which bore a weighted average interest rate of 5.5%6.0% and 5.8%, respectively.
We may fromFrom time to timetime, we may seek to incur additional debt obligations, refinance or increase our outstanding debtdebt, or retire or purchase our outstanding debt through additional debt issuances, cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, redemptions or otherwise. Such additional debt issuances, repurchases, exchanges or redemptions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictionsobligations and restrictions, and other factors. The amounts involved may or may not be material during any particular reporting period.
As of MarchJune 31,30, 2026, we had outstanding $500.0 million in aggregate principal amount of our 3.875% Senior Notes due 2029 (the “2029 Notes”), which principal balance is due in August 2029. Prior to that date, interest only payments are due semi-annually in February and August of each year. These notes were issued under an indenture which contains certain restrictive covenants on issuing future secured debt and other transactions, and contains various optional redemption provisions to redeem the 2029 Notes, in whole or in part, at a time before, on, or after, February 15, 2029, and a put provision triggered by certain change of control events. As of MarchJune 31,30, 2026, the aggregate obligation, inclusive of unamortized financing costs on these notes, was $497.4$497.6 million.
As of MarchJune 31,30, 2026, we had outstanding $500.0 million in aggregate principal amount of our 6.625% Senior Notes due 2033 (the “2033 Notes”), which principal balance is due in September 2033. Prior to that date, interest only payments are due semi-annually in March and September of each year. These notes were issued under an indenture which contains certain restrictive covenants on issuing future secured debt and other transactions, and contains various optional redemption provisions to redeem the 2033 Notes, in whole or in part, at a time before, on, or after, September 15, 2028, and a put provision triggered by certain change of control events. As of MarchJune 31,30, 2026, the aggregate obligation, inclusive of unamortized financing costs on these notes, was $493.6$493.8 million.
As of MarchJune 31,30, 2026 and December 31, 2025, $104.8$119.0 million and $90.3 million was outstanding under the construction loan agreements respectively, with borrowings that bore a weighted average interest rate of 6.0% and 6.1% as of MarchJune 31,30, 2026 and December 31, 2025, respectively, and we were in compliance with all covenants thereunder.
As of MarchJune 31,30, 2026 and December 31, 2025, $203.7$329.6 million and $51.5 million, respectively, was outstanding under the revolving line of credit, with borrowings that bore an interest rate of 5.2% and 5.2%, respectively, and we were in compliance with all covenants under the Credit Agreement.
Inspire is party to mortgage warehouse facilities with J.P. Morgan Chase Bank, N.A.,N.A. and U.S. Bank National Association and Truist Bank,Association, which provide Inspire with uncommitted repurchase facilitiesfacilities, ofand Truist Bank, which provides Inspire with a committed repurchase facility, collectively providing up to an aggregate of $375.0$300.0 million as of MarchJune 31,30, 2026, secured by the mortgage loans financed thereunder. The repurchase facilities have varying short term maturity dates through NovemberMay 13,28, 2026.2027. Borrowings under the mortgage repurchase facilities bear interest at variable interest rates per annum equal to SOFR plus an applicable margin, and bore a weighted average interest rate of 5.4%5.2% and 5.4% as of MarchJune 31,30, 2026 and December 31, 2025, respectively.
Amounts outstanding under the repurchase facilities are not guaranteed by us or any of our subsidiaries, and the agreements contain various affirmative and negative covenants applicable to Inspire that are customary for arrangements of this type. As of MarchJune 31,30, 2026 and December 31, 2025, we had $211.2$232.5 million and $289.3 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.
In the normal course of business, we post letters of credit and performance and other bonds primarily related to our land development performance obligations with local municipalities. As of MarchJune 31,30, 2026 and December 31, 2025, we had issued and outstanding letters of credit under various facilities of $60.2$56.2 million and $65.3 million, respectively, and we had issued and outstanding performance and other bonds of $407.8$426.7 million and $445.1 million, respectively. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and performance and other bonds are not generally fully released until all development and construction activities are completed.
Our stock repurchase program authorizes us to repurchase up to 4.5 million shares of our outstanding common stock, of which 1.81.5 million shares remained available to be repurchased as of MarchJune 31,30, 2026. During the three and six months ended MarchJune 31,30, 2026 and 2025,2026, an aggregate of 617.1352.8 thousand shares and 753.3969.9 thousand shares, respectively, were repurchased under our stock repurchase program for a total purchase price of approximately $40.0$19.6 million and $55.6$59.6 million, respectively, and a weighted average per share price of $64.82$55.54 and $73.76 per share,$61.44, respectively, excluding the excise tax accrued on our net share repurchases as a result of the Inflation Reduction Act of 2022. During the three and six months ended June 30, 2025, an aggregate of 883.6 thousand shares and 1.6 million shares, respectively, were repurchased for a total purchase price of approximately $48.0 million and $103.6 million, respectively, and a weighted average per share price of $54.35 and $63.28, respectively.
CCS insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-01 | Dixon John Scott |
Shares withheld for tax | 748 | $67.16 | $50.2K |
| 2026-08-01 | Dixon John Scott |
Option exercise | 59 | — | — |
| 2026-08-01 | Dixon John Scott |
Option exercise | 1,649 | — | — |
| 2026-05-06 | Box John P |
Grant/award | 3,225 | — | — |
| 2026-05-06 | Guericke Keith R |
Grant/award | 3,225 | — | — |
| 2026-05-06 | Lippman James M |
Grant/award | 3,225 | — | — |
| 2026-05-06 | Ramirez Elisa Z |
Grant/award | 3,225 | — | — |
| 2026-05-06 | Arvielo Patricia L. |
Grant/award | 3,225 | — | — |
Well-known investors holding CCS (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 251,173 | $18.0M | 0.01% | Added 24% |
| First Eagle Investment Management | 2026-06-30 | 256,716 | $14.7M | — | Sold out |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 124,658 | $8.9M | 0.0% | Reduced 36% |
| D. E. Shaw & Co. | 2026-06-30 | 120,850 | $8.7M | 0.01% | Reduced 16% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 33,269 | $2.4M | 0.0% | Added 53% |
| Millennium Management (Israel Englander) | 2026-06-30 | 10,633 | $610.1K | — | Sold out |