MHO 10-K & 10-Q changes, risk factors and insider trading

•population growth, household formations and other demographic changes that may be driven by, among other factorsfactors, birth rate changes or U.S. immigration changes;

Housing market conditions improvedwere challenging in 2024, as interest rates continued to hover around 7%2025 and consumer confidence continuedweakened toas improve.affordability However,concerns anywere declineexacerbated by elevated mortgage interest rates and uncertain trade policies. Declines in the homebuilding and mortgage lending industries and overall economy could decrease the market value of our inventory which could have a negative impact on our gross margins from home sales.sales as we experienced in 2025 compared to 2024. We recorded an aggregate charge of $47.7 million during 2025 that included $11.8 million of write-offs of land deposits and pre-acquisition costs for land we no longer intend to purchase and $35.9 million of inventory impairments. Of these charges, $6.7 million and $41.0 million were attributable to the Northern homebuilding operating segment and the Southern homebuilding operating segment, respectively. A reduction in our gross margins from home sales could have a significantly negative impact on our financial position and results of operations. Additional external factors, such as foreclosure rates, mortgage availability, high inflation, competition and unemployment rates, could also negatively impact our results.

Although ourOur absorption rate, cancellation rate and new contracts improveddeclined duringin 20242025 compared to prior year,year anywhile our cancellation rate increased year over year. Any further decline in sales activity could adversely affect our results of operations, financial condition and cash flows.

Our financial services business is closely related to our homebuilding business,business as it originates mortgage loans principally on behalf of purchasers of the homes we build. If demand for our homes declines in the future, the financial results of our financial services segment willmay also decline.

The homebuilding industry is fragmented and highly competitive. We compete with numerous public and private homebuilders, including some that are substantially larger than us and may have greater financial resources than we do. We also compete with community developers and land development companies, some of which are also homebuilders or affiliates of homebuilders. Homebuilders compete for customers, land, building materials, subcontractor labor and financing. Competition for new home orders is primarily based upon home sales price, location of property, home style, financing available to prospective homebuyers, quality of homes built, customer service and general reputation in the community, and may vary by market, sub-market and even by community. Additionally, competition within the homebuilding industry can be impacted by an excess supply of new and existing homes available for sale resulting from a number of factors including, among other things, increases in unsold started homes available for sale and increases in home foreclosures. Increased competition may cause us to decrease our home sales prices and/or increase home sales incentives in an effort to generate new home sales and maintain homes in backlog until they close. Increased competition can also result in us selling fewer homes or experiencing a higher number of cancellations by homebuyers. If, for example, prices for new homes decline, competitors increase their use of sales incentives, mortgage interest rates increase, the availability of mortgage financing diminishes, current homeowners find it difficult to sell their current homes, homebuyers are concerned about rising inflation, or there is a downturn in local or regional economies or in the national economy, homebuyers may choose to terminate their existing home purchase contracts with us in order to negotiate for a lower price or because they cannot, or will not, complete the purchase and our remedies generally do not extend beyond the retention of deposits. These competitive pressures may negatively impact our future financial and operating results.

Further reductionReductions in the availability of mortgage financing orfinancing, continued elevated mortgage interest rates for prolonged periods and further increases in mortgage interest rates or down payment requirements could adversely affect our business.

Mortgage interest rates have remained elevated since rising in 2022 after a period of historicallyhistorical low rates, which has increased the costs of owning a home and reduced the demand for our homes. Despite the Federal Reserve reducing rates by 100an additional 75 basis points during the second half of 2024,2025, mortgage rates continue to hover between 6% and 7%. Any rate increases by the Federal Reserve could further increase the costs of owning a home and reduce the demand for our homes. Demand for new homes may also further decline or fail to improve if mortgage interest rates remain elevated for a longer period of time.

In addition, any reduction in the availability of the financing provided by Fannie Mae and Freddie Mac could adversely affect mortgage interest rates, mortgage availability and our sales of new homes and origination of mortgage loans.

FHA and VA mortgage financing support remains an important factor in marketing our homes. Any increases in down payment requirements, lower maximum loan amounts, or limitations or restrictions on the availability of FHA and VA financing support could adversely affect mortgage interest rates, mortgage availability and our sales of new homes and origination of mortgage loans.

We must anticipate demand for new homes several years before actually selling homes to homeowners. There are significant risks inherent in controlling or purchasing land, especially as the demand for new homes fluctuates and land purchases become more competitive, which can increase the costs of land. There is often a significant time lag between when we acquire land for development and when we sell homes in neighborhoods we have planned, developed and constructed. The value of undeveloped land, lots and housing inventories can fluctuate significantly as a result of changing market conditions. In addition, inventory carrying costs can be significant, and fluctuations in value can reduce profits. Economic conditions could require us to sell homes or land at a loss, hold land in inventory longer than planned or walk away from land that we no longer intend to purchase resulting in write-offs of land deposits, which could significantly impact our financial condition, results of operations, cash flows and stock performance. WeAdditionally, we are required to periodically evaluate our inventory for potential impairment, which may result in additional valuation adjustments that could be significant and negatively impact our results of operations and financial condition. We recorded an aggregate charge of $47.7 million during 2025 that included $11.8 million of write-offs of land deposits and pre-acquisition costs for land we no longer intend to purchase as a result of our efforts to right-size our land portfolio and $35.9 million of inventory impairments. We cannot make any assurances that the measures we employ to manage inventory risks and costs will be successful.successful or that we will not record additional inventory impairment charges or write-offs of land deposits and pre-acquisition costs.

The residential construction industry experiences labor and material shortages and risks from time to time, including: work stoppages; labor disputes; shortages in qualified subcontractors and construction personnel; lack of availability of adequate utility infrastructure and services; our need to rely on local subcontractors who may not be adequately capitalized or insured; and delays in availability, or fluctuations in prices,prices of building materials. These labor and material shortages and risks can be more severe during periods of strong demand for housing or during periods when the markets in which we operate experience natural disasters that have a significant impact on existing residential and commercial structures. Any of these circumstances could delay the start or completion of our communities, increase the cost of developing one or more of our communities and increase the construction cost of our homes. If labor and building material shortages and cost increases return, our gross margins and results of operations could be adversely affected if we are unable to continue to increase prices or achieve other cost savings.

Inflation can have a long-term adverse impact on us because if our costs of land, materials and labor increase, we would need to increase the sale prices of our homes to maintain satisfactory margins. AsAlthough ainflation resultdeclined in 2025 compared to the past several years, many of the historicallyincreases highin ratescosts of inflationthat we experienced infrom 2022 andthrough into2024 earlyhave 2023, we experienced increases in the costs of land, materials and labor.persisted. We may continue to experience high rates of inflation in the future, and in a high inflationary environment, we may not be able to raise home prices enough to keep pace with the increased costs of land and house construction, which could reduce our profit margins.

We have operations in Ohio, Indiana, Illinois, Michigan, Minnesota, North Carolina, Florida, Tennessee and Texas. Our limited geographic diversification could adversely impact us if the demand for new homes or the level of homebuilding activity in our current markets declines, since there may not be a balancing opportunity in a stronger market in other geographic regions. Moreover, certain insurance companies doing business in states in which we operate could restrict, curtail or suspend the issuance of homeowners’ insurance policies on single-family homes. This could both reduce the availability of hurricane, fire and other types of natural disaster insurance, in general, and increase the cost of such insurance to prospective purchasers of homes. Mortgage financing for a new home is conditioned, among other things, on the availability of adequate homeowners’ insurance.

We record warranty and other reserves for the homes we sell based on a number of factors, including historical experience in our markets, insurance and actuarial assumptions and our judgment with respect to the qualitative risks associated with the types of homes we build. We recorded $11.2 million in additional warranty claims in 2025 in two communities in Florida primarily relating to attic ventilation issues. Because of the high degree of judgment required in determining these liability reserves, our actual future liability could differ significantly from our reserves. Given the inherent uncertainties, we cannot provide assurance that our insurance coverage, our subcontractor arrangements and our reserves will adequately address all of our construction defect, product liability and warranty claims. If the costs to resolve these claims exceed our estimates, our results of operations, financial condition and cash flows could be adversely affected.

We rely on subcontractors to construct our homes, and in many cases, select and obtain building materials. Despite our detailed specifications and quality control procedures, in some cases, it may be determined that subcontractors used improper construction processes or defective materials in the construction of our homes. Although our subcontractors have principal responsibility for defects in the work they do, we have ultimate responsibility to the homebuyers. When we identify these defects, we repair them in accordance with our warranty obligations. As mentioned above, we recorded an additional $11.2 million for warranty claims in two or our Florida communities primarily relating to attic ventilation issues. Improper construction processes and defective products widely used in the homebuilding industry can result in the need to perform extensive repairs to large numbers of homes. The cost of complying with our warranty obligations may be significant if we are unable to recover the cost of repairs from subcontractors, materials suppliers and insurers.

As of December 31, 2024,2025, we had approximately $695.0$696.3 million of indebtedness (net of debt issuance costs), excluding issuances of letters of credit andcredit, our $300$200 million mortgage repurchase facility, with M/I Financial as borrower (the “MIF Mortgage Repurchase Facility”) and our $100 million master repurchase facility, with M/I Financial as borrower (the “MIF Master Repurchase Facility), and we had $569.6$806.8 million of remaining availability for borrowings under the Credit Facility. In addition, under the terms of the Credit Facility, the indentures governing the 2030 Senior Notes and the 2028 Senior Notes and the documents governing our other indebtedness, we have the ability, subject to applicable debt covenants, to incur additional indebtedness. Our incurrence of additional indebtedness could magnify other risks related to us and our business. Our indebtedness and any future indebtedness we may incur could have a significant adverse effect on our future financial condition.

•borrowings under the Credit Facility bear, and borrowings under any new facility could bear, interest at floating rates, which could result in higher interest expense in the event of an increase in mortgage interest rates;

The M/I Financial repurchase facilityfacilities will expire in 2025.2026.

M/I Financial uses the MIF Mortgage Repurchase Facility and the MIF Master Repurchase Facility to finance eligible residential mortgage loans originated by M/I Financial. ThisThese facilityfacilities will expire on October 21,20, 2025.2026. If we are unable to renew or replace the MIF Mortgage Repurchase Facility or the MIF Master Repurchase Facility when itthey matures,mature, the activities of our financial services segment could be impeded and our home sales and homebuilding and financial services results of operations may be adversely affected.

The failure of banks or financial institutions could have an adverse effect on our liquidity or consolidated financial statements if we have deposits at the failed banks or financial institutions, or if the failed banks or financial institutions, or any substitute or additional banks or financial institutions, participate in our Credit Facility. Under our Credit Facility, non-defaulting lenders remain obligated to fund amounts up to their commitment level under the Credit Facility. However, non-defaulting lenders are not obligated to cover or acquire a defaulting lender’s respective commitment to fund loans or to issue letters of credit and may be unwilling to issue additional letters of credit if we do not enter into arrangements to address the risk with respect to the defaulting lender (which may include cash collateral). If the non-defaulting lenders are unable or unwilling to cover or acquire a defaulting lender’s respective commitment, the borrowing and letter of credit capacities under our Credit Facility may be more limited. In addition, if a buyer under the MIF Mortgage Repurchase Facility or the MIF Master Repurchase Facility, which M/I Financial uses to fund mortgage originations, fails or is unable or unwilling to fulfill its obligations, M/I Financial’s borrowing capacity under the MIF Mortgage Repurchase Facility or the MIF Master Repurchase Facility may be limited and have an adverse effect on our liquidity and ability to provide mortgage loans to our homebuyers.

Our business is impacted by international or cross-border trade, including the import and export of products and goods into and out of the United States and trade tensions among nations. The shipping of goods across national borders is often more expensive and complicated than domestic shipping. Political and economic tensions between governments create uncertainty with respect to tariffs, taxes and trade policies. During the past several years, the U.S. government has imposed new, or increased existing, tariffs on an array of imported materials and products that are used in the homes we build, including but not limited to, lumber, steel, aluminum and washing machines, which increases the costs of those items. Changes in U.S. administrative policy may strain international trade relations and lead to the imposition of non-tariff barriers or domestic preference procurement requirements and/or the imposition of retaliatory tariffs and other reactionary measures by foreign countries, including but not limited to Mexico, Canada, China and European countries. On February 1, 2025, President Trump signed executive orders imposing additional tariffs on Canada, Mexico and China under the International Emergency Economic Powers Act. While the imposition of tariffs on Canada and Mexico was subsequently paused on February 3, 2025, uncertainty remains around the logistics of international trade in the future. Any existing, new or increased tariffs could increase the cost of, and reduce the demand for, homes we build and any cost increases will either require us to increase prices or negatively impact our margins. New or increased tariffs could also negatively affect U.S. national or regional economies, which could negatively affect the demand for our homes.

We use information technology, digital communications and other computer resources to carry out important operational and marketing activities and to maintain our business records. We have implemented systems and processes intended to address ongoing and evolving cyber securitycybersecurity risks, secure our information technology, applications and computer systems, and prevent unauthorized access to or loss of sensitive, confidential and personal data. We adhere to the National Institute of Standards and Technology (“NIST”) CSF Framework to ensure we have proper controls in place to reduce our risk to cyber security threats. We also depend on various partners and providers, and our mortgage and title service software partners, to secure our home buyers’ personal identifiable and confidential information. We provide regular personnel awareness training regarding potential cyber security threats, including the use of internal tips, reminders and phishing assessments, to help ensure employees remain diligent in identifying potential risks. In addition, we have deployed monitoring capabilities to support early detection, internal and external escalation, and effective responses to potential anomalies. However, cyberattacks or other security breaches may remain undetected over an extended period of time and may not be addressed in a timely manner to minimize the impact, which could result in substantial costs. Many of our information technology and other computer resources are provided to us and/or maintained on our behalf by third-party service providers pursuant to agreements that specify to varying degrees certain security and service level standards. We also rely uponon our third-party service providers to maintain effective cyber security measures to keep our information secure and to carry cyber insurance. Although we and our service providers employ what we believe are adequate security, disaster recovery and other preventative and corrective measures, our security measures, taken as a whole, may not be sufficient for all possible situations and may be vulnerable to, among other things, hacking, employee error, system error and faulty password management.

M/I Homes, Inc. andtogether with its subsidiaries is one of the nation’s leading builders of single-family homes, having sold over 160,000168,200 homes since commencing homebuilding activities in 1976. The Company’s homes are marketed and sold primarily under the M/I Homes brand. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Minneapolis/St. Paul, Minnesota; Detroit, Michigan; Fort Myers/Naples, Tampa, Sarasota and Orlando, Florida; Austin, Dallas/Fort Worth, Houston and San Antonio, Texas; Charlotte and Raleigh, North Carolina; and Nashville, Tennessee.

Our warranty reserve amounts are based upon historical experience and geographic location. While we believe that our warranty reserves are sufficient to cover our projected costs, there can be no assurances that historical data and trends will accurately predict our actual warranty costs. During 2025, our warranty reserves have been adversely affected by warranty repairs in two of our Florida communities primarily related to attic ventilation issues. See Note 1 and Note 8 to our Consolidated Financial Statements for additional information related to our warranty reserves.

We achieved the followingOur results duringfor the year ended December 31, 20242025 in comparison to the year ended December 31, 20232024 were as follows:

•Homes delivered increaseddecreased 12%1% to 9,055, an all-time record for our Company8,921

•Revenue increaseddecreased 12%2% to $4.5$4.4 billion, an all-time record for our Companybillion

•Pre-tax income increaseddecreased 21%28% to an$526.6, all-time record $733,608, 16.3%11.9% of revenue

•Net income increaseddecreased 21%29% to $564$402.9 million, an all-time record for our Companymillion

•New contracts increaseddecreased 8%4% to 8,5848,199

•Absorption pace of sales per community remaineddeclined consistentto at3.0 per month compared to 3.3 per month

In addition to the results described above, our financial services operations recorded a $14.7$4.8 million increase in operating income in 20242025 compared to 20232024 as a result of an increaseincreases in closings and a slight increase in the average loan amount.

Our company-wide absorption pace of sales per community in 20242025 remaineddeclined consistent compared to 2023 atfrom 3.3 per month in 2024 to 3.0 per month in 2025 as a result of ourlower 8%homebuyer increasedemand which resulted in a 4% decrease in new contracts during 20242025 compared to prior year,year. partially offset by a smaller increase in ourOur average community count did increase from 202216 atin the end of 20232024 to 216229 atin the end of 2024.2025. We plan to open additional new communities during 2025,2026 increasingand increase our average community count by approximatelyabout 5% compared to 2024.2025.

Income before income taxes for the twelve months ended December 31, 20242025 increaseddecreased 21%28% from $607.3 million for the year ended December 31, 2023 to $733.6 million for the year ended December 31, 2024.2024 to $526.6 million for the year ended December 31, 2025. In 2024,2025, weour achievednet income was $402.9 million, or $14.74 per diluted share, compared to net income of $563.7 million, or $19.71 per diluted share, compared to net income of $465.4 million, or $16.21 per diluted share in 2023.2024. Our effective tax rate was 23.2%23.5% in 20242025 compared to 23.4%23.2% in 2023.2024.

In 2024,2025, we recorded total revenue of $4.50$4.42 billion, of which $4.39$4.29 billion was from homebuilding and $116.2$125.5 million was from our financial services operations. Revenue from homes delivered increaseddecreased 12%2% from 20232024 driven primarily by a 12%1% increasedecrease in both the number of homes delivered in 20242025 (943134 units) asand the average sales price of homes delivered remained(decreased $483,000.$4,000 per home). Our revenue and average sales price reflect a $200.0 million reduction for incentives and closing costs in 2025 compared to a $131.3 million reduction for incentives and closing costs in 2024. Revenue from our financial services segment increased 24%8% to $116.2$125.5 million in 20242025 as a result of an increaseincreases in loans closed and sold during the year and a slight increase in the average loan amount.

Total gross margin (total revenue less total land and housing costs) increaseddecreased $180.0$181.7 million in 20242025 compared to 20232024 as a result of a $157.6$190.9 million increasedecrease in the gross margin of our homebuilding operations andpartially offset by a $22.4$9.3 million improvement in the gross margin of our financial services operations. Our homebuilding gross margin improveddeclined $157.6$190.9 million due to the 12% increase in the number of homes delivered. Ourand homebuilding gross margin percentage improveddeclined 120390 basis points from 23.5%24.7% in the prior year to 24.7%20.8% in 2024.2025. The decline in gross margin dollars primarily resulted from the decreases in homes delivered and average sales price, which included a $53.3 million increase in mortgage interest rate buydowns offered, $64.9 million increase in lot costs, $47.7 million for inventory charges and $11.2 million in warranty claims in two of our Florida communities primarily relating to attic ventilation issues. The improvement in the gross margin of our financial services operations improvedis by $22.4 million in 2024 comparedattributable to 2023 as a result of an increase in the number of loan originations, higher margins on loans sold, and a slightan increase in the average loan amount during 20242025 compared to prior year.

For 2024,2025, selling, general and administrative expense increased $61.1$17.9 million, and increased as a percentage of revenue to 11.6% in 2025 from 10.9% in 2024 from 10.7% in 2023.2024. Selling expense increased $25.4$13.5 million from 20232024 and remained consistentincreased as a percentage of revenue atto 5.2%.5.6% Salesfrom and5.2% realtorin 2024. Realtor commissions contributed $16.5$7.7 million to the increase in selling expense in 20242025 due to the increase in the homes delivered as well as higher externalrealtor sales commission ratescommissions paid during the period compared to prior year. In addition to commissions, costs associated with our sales offices, including compensation-related expenses and models, increased $8.9$5.8 million in 20242025 due to our increased community count. General and administrative expense increased $35.7$4.3 million in 20242025 compared to 20232024 and also increased as a percentage of revenue from 5.5% in 2023 to 5.7% in 2024.2024 to 5.9% in 2025. The dollar increase in general and administrative expense was primarily due to ana $19.4$1.2 million increase in compensation-related expenses, a $4.2$1.2 million increase in costs associated with information systems, a $3.8 million increase in professional fees, a $2.3 million increase in land-related costs, and a $6.0$1.9 million increase in miscellaneous expenses.

•managing ourManage land spend and inventorymaintain levelsdisciplined cost management;

•maintainingMaintain a strong balance sheet and liquidity levels;levels, and low leverage.

•Continue emphasizing product quality, customer service, product quality and design, and premier community locations.

We ended 20242025 with approximately 52,20050,000 lots under control, which represents a 5.8 year5.6-year supply of lots based on 20242025 homes delivered, including certain lots that we anticipate selling to third parties. This represents a 14%4% increasedecrease from our approximately 45,70052,200 lots under control at the end of 2023.2024.

We opened 7281 communities and closed 6569 communities in 2024,2025, ending the year with a total of 220232 communities, compared to 213220 at the end of 2023.2024. Although the timing of opening new communities and closing out existing communities is subject to substantial variation, we expect to grow our 2026 average community count by approximatelyabout 5% bycompared the end ofto 2025.

(a)Our financial services operational results should be viewed in connection with our homebuilding business as its operations originate loans and provide title services primarily for our homebuyers,homebuying customers, with the exception of aan smallimmaterial amount of mortgage refinancing.

(bc)Other income is comprised of the equity in (income) loss from joint venture arrangements.

The following table showshows supplemental segment information regarding depreciation and amortization expense for years ended December 31, 2024,2025, 20232024 and 20222023:

We believe that there have been no significant changes to our critical accounting policies during the quarter ended MarchJune 31,30, 2026 as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Form 10-K.

Our performanceresults induring the second quarter and first three monthshalf of 2026 remainedin consistentcomparison with our current expectations. Key comparisons betweento the second quarter and first quartershalf of 2026 and 2025 arewere as follows:

•New contracts increased 3%15% to 2,350a record 2,387 from 2,2922,078 and increased 8% to 4,737 from 4,370, respectively

•Homebuilding debt to capital ratio was 18% for both periods Additionally, our financial services segment achieved its second highest revenue in a firstsecond quarter,quarter and improved capture rate and increased loan originations to a96% firstfrom 92% in second quarter record.2025.

Our company-wide absorption pace of sales per community for the firstsecond quarter of 2026 was 3.4 per month consistentcompared withto 3.0 for the prior year’s firstsecond quarter. We plan to open additional new communities during the remainder of 2026 and increase our average community count by about 5% from 2025.

Income before income taxes for the firstsecond quarter of 2026 decreased $56.9$55.5 million from $146.1$160.1 million in the firstsecond quarter of 2025 to $89.2$104.6 million in 2026. Net income was $67.8$79.1 million, or $2.55$3.02 per diluted share, in 2026's firstsecond quarter, compared to $111.2$121.2 million, or $3.98$4.42 per diluted share, in 2025's firstsecond quarter. Our effective tax rate was 23.9%24.4% and 24.3% in both the firstsecond quarter of 2026 and 2025, respectively. For the first half of 2026, income before income taxes decreased $112.5 million from $306.2 million in the first half of 2025 to $193.7 million in 2026. We achieved net income of $146.9 million, or $5.57 per diluted share, during the first half of 2026 compared to net income of $232.5 million, or $8.40 per diluted share, in the six months ended June 30, 2025. Our effective tax rate was 24.2% in 2026's first half compared to 24.1% in the same period in 2025.

During the quarter ended MarchJune 31,30, 2026, our total revenue was $920.7$1.06 million,billion, of which $889.5$1.03 millionbillion was from homebuilding and $31.2$32.3 million was from our financial services operations. Revenue from homebuilding decreased 6%9% in 2026's firstsecond quarter compared to the same period in 2025 driven primarily by a 4% decrease in the average sales price of homes delivered ($17,000$20,000 per home delivered) and a 3%6% decrease in the number of homes delivered (62142 units) offset in part by a 1%$12.3 million increase in land sales. Our revenue and average sales price reflect a $52.7$63.2 million reduction for sales incentives and closing costs in the firstsecond quarter of 2026 compared to a $40.0$47.1 million reduction for sales incentives and closing costs in 2025's firstsecond quarter. Revenue from our financial services segment decreasedincreased 1%3% to $31.2$32.3 million in the firstsecond quarter of 2026 as a result of lowerslightly higher margins on loans sold,sold and an improved capture rate, partially offset by improveda capture rate and an increasedecrease in loans originated during the period compared to the firstsecond quarter of 2025. For the first half of 2026, we recorded year-to-date total revenue of $1.98 billion, of which $1.92 billion was from homes delivered and $63.6 million was from our financial services operations. Revenue from homebuilding decreased 8% in the first half of 2026 compared to the same period in 2025 driven primarily by decreases in the number of homes delivered (204 units) and the average sales price of homes delivered ($19,000 per home delivered). Our revenue and average sales price reflect a $115.9 million reduction for incentives and closing costs in 2026’s first six months compared to an $87.1 million reduction for incentives and closing costs in 2025’s first six months. Revenue from our financial services segment increased 1% to $63.6 million in the first half of 2026 compared to the first half of 2025 as a result of an increase in loans originated during the period and an improved capture rate, offset by a decrease in the average loan amount during the period.

Total gross margin (total revenue less total land and housing costs) decreased $50.2$51.1 million in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 as a result of a $49.9$52.0 million decline in the gross margin of our homebuilding operationsoperations, andpartially offset by a $0.3$0.9 million decreaseincrease in the gross margin of our financial services operations. Our homebuilding gross margin percentage declined by 410290 basis points to 19.3%19.7% in the firstsecond quarter of 2026 from 23.4%22.6% in the firstsecond quarter of 2025. The decline in homebuilding gross margin dollars primarily resulted from the decrease in average sales price of homes delivered, aan $6.2$8.7 million increase in lot costs, a $13.4$22.0 million increase in mortgage interest rate buydowns offered andoffered, a 3%6% decrease in homes delivered and $4.2 million in 2026inventory comparedcharges toin 2025.2026. Our homebuilding gross margin may fluctuate from quarter to quarter depending on the mix of communities delivering homes due to the variation in margin between different communities, number of homes under construction and incentivessales used to encourage demand due to market conditions.incentives. During the firstsecond quarter of 2026, homebuilding gross margin was compressed primarily due to mix of inventory homes delivered, incentives offered and increased lot costs. The gross margin of our financial services operations decreasedincreased $0.3$0.9 million in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 as a result of lowerhigher margins on loans sold, an improved capture rate, partially offset by improveda capture rate and an increasedecrease in the number of loan originations. Total gross margin decreased $101.3 million in the first half of 2026 compared to the same period in 2025 as a result of a $101.9 million decline in the gross margin of our homebuilding operations offset, in part, by a $0.6 million improvement in the gross margin of our financial services operations. This decline in the gross margin of our homebuilding operations is primarily due to a decrease in the number of homes delivered, a decrease in the average sales price of homes delivered ($19,000 per home delivered), a $14.5 million increase in lot costs, and $4.2 million in inventory charges. The gross margin of our financial services operations increased $0.6 million in the first half of 2026 compared to the same period in 2025 as a result of an increase in loans originated during the period and an improved capture rate, partially offset by a decrease in the average loan amount during the period.

We opened 2249 new communities during the first quarterhalf of 2026 and closed 2447 communities. We sell a variety of home types in various communities and markets, each of which yields a different gross margin. The timing of the openings of new replacement communities as well as underlying lot costs varies from year to year. The mix of communities delivering homes may cause fluctuations in our new contracts, absorption pace and housing gross margin from year to year.

For the three months ended MarchJune 31,30, 2026, selling, general and administrative expense increased $4.6$3.3 million, and increased as a percentage of revenue from 11.5%11.3% in the firstsecond quarter of 2025 to 12.7%12.6% in the firstsecond quarter of 2026. Selling expense increased $2.5$0.4 million from 2025's firstsecond quarter and increased as a percentage of revenue to 6.0% in 2026's firstsecond quarter from 5.4%5.5% for the same period in 2025. The dollar increase in selling expense is related to a $1.0$1.2 million increase in realtoradvertising commissionsexpenses and a $1.5$2.1 million increase in costsexpenses associatedrelated withto ourmodel homes and sales offices, including compensation-relatedcompensation expensesrelated expenses, partially offset by a $2.9 million decrease in realtor and sales commissions in the firstsecond quarter of 2026. General and administrative expense increased $2.1$2.9 million in the firstsecond quarter of 2026 compared to firstthe second quarter of 2025 and increased as a percentage of revenue to 6.6% in the firstsecond quarter 2026 from 6.1%5.8% in the firstsecond quarter of 2025. The dollar increase in general and administrative expense was primarily due to a $0.8$1.3 million increase in compensation-related expenses due to increased head count, a $0.2$0.6 million increase in costs associated with information systems, a $0.6$0.2 million increase in land relatedland-related expenses and a $0.5$0.8 million increase in miscellaneous expenses. For the six months ended June 30, 2026, selling, general and administrative expense increased $8.0 million, and increased as a percentage of revenue from 11.4% in the six months ended June 30, 2025 to 12.6% in the first six months of 2026. Selling expense increased $2.9 million from the first half of 2025 and increased as a percentage of revenue to 6.0% in 2026's first half from 5.4% for the same period in 2025. The dollar increase in selling expense in the second quarter of 2026 related to a $4.8 million increase in costs associated with our sales offices, including compensation-related and advertising expenses, offset by a $1.9 million decrease in realtor and sales commissions. General and administrative expense increased $5.1 million compared to the first half of 2025 and increased as a percentage of revenue from 5.9% in the six months ended June 30, 2025 to 6.6% in the first six months of 2026. The increase in general and administrative expense was primarily due to a $2.0 million increase in compensation-related expenses due to higher average headcount and equity incentives offset in part by bonus expense, a $0.9 million increase in costs associated with information systems, a $0.8 million increase in land-related expenses, and a $1.4 million increase in various other expenses, including advertising expenses.

The housing market continues to be affected by persistentface macroeconomic challenges, including elevated mortgage interest rates, affordability constraints, and broader economic uncertainty, including tariffs, inflationary pressures, evolving trade and tariff policies, labor market conditions,uncertainty, recessionaryrecession concernsconcerns, and ongoing geopolitical uncertainty.volatility, which have continued to affect consumer confidence and homebuying activity. While we remain constructiveconfident onin the long-term outlookprospects forof our business, we believe these market conditions may persist throughoutthrough the remainder of the year.2026. In response, we areremain focused on executing operating strategies designed to mitigatenavigate thesethis conditions,environment, including controllingdisciplined overhead costs,management, prudently managingprudent land investmentsacquisition and development spending, maintaining pricing discipline, and selectivelythe offeringselective incentives—use of sales incentives, including mortgage interest rate buydowns—buydowns, to enhanceimprove affordability, support demand, increase ordersales activity, and minimizereduce contract cancellations.

WeDespite these challenges, we believe the long-term fundamentals ofsupporting the housing market remain supportedfavorable. Demand continues to be driven by favorable demographic trends, continued household formation, and a sustainedan undersupply of both new and existing homes.homes, Inparticularly addition,in wethe areaffordable optimistichousing segment. We also believe that any future moderation in mortgage interest rates may decline in the future, which maycould improve affordability and homebuyerfurther support housing demand. However, the timing and extentmagnitude of any such improvementchanges remain uncertain and will depend on broadereconomic economic,conditions, politicalmonetary policy, capital markets, and capitalgeopolitical marketdevelopments. conditionsAdditionally, beyondhousing ouraffordability control.and supply remain important policy priorities at the federal level, with continued focus on initiatives intended to expand housing availability and improve access to homeownership.

We believe we are well positioned to navigateoperate successfully in the current operating environment. Although our backlog at the end of the firstsecond quarter of 2026 was lower than in the priorprior-year year,period, it remainsremained solid,healthy, with an average sales price approximately 2%3% lower than atbelow the endcomparable ofprior-year thelevel, firstreflecting quarterour ofcontinued 2025.focus on affordability. Our strong balance sheetsheet, liquidity, and liquiditydisciplined positioncapital allocation provide the financial flexibility to respond to changing market conditions.conditions and pursue opportunities as they arise. Nevertheless, continuedthe successoperating environment remains dynamic, and our future performance will depend on our ability to remain responsiveadapt to evolving economic conditions,and andmarket conditions. Accordingly, there can be no assurance that our current strategies will be sufficient tofully offset the riskseffects associatedof with ongoingcontinued market volatility and uncertainty.

•Continue emphasizing product quality, customer service, and premier community locations During the first threesix months of 2026, we invested $79.2$210.3 million in land acquisitions and $104.4$259.1 million in land development compared to $146.0$247.7 million and $101.6$240.6 million, respectively, during the first threesix months of 2025. We invested in fewer land acquisitions in the first quarterhalf of 2026 compared to the first quarterhalf of 2025 as a result of the land supply needs of our divisions. We continue to closely review our land acquisition and land development spending and monitor our ongoing pace of home sales and deliveries, and we will adjust our land acquisition and development spend accordingly.

We ended the firstsecond quarter of 2026 with approximately 50,00049,100 lots under control, which represents an approximately five-year supply of lots based on the past twelve months of homes delivered, including certain lots that we anticipate selling to third parties. This represents a 2%3% decrease from our approximately 51,10050,500 lots under control at the end of last year’s firstsecond quarter.

We opened 2249 communities and closed 2447 communities in the first quarterhalf of 2026, ending the firstsecond quarter with 230234 active communities, comparedthe tosame 226as at the end of last year’s firstsecond quarter. Although the timing of opening new communities and closing existing communities is subject to substantial variation, we expect to grow our average community count by approximately 5% in 2026 compared to 2025.

The following table shows, by segment: revenue; cost of sales; selling, general and administrative expense; operating income; and interest (income) expense - net for the three and six months ended MarchJune 31,30, 2026 and 2025:

The following tables show total assets by segment at MarchJune 31,30, 2026 and December 31, 2025:

The following table presents, by reportable segment, selected operating and financial information as of and for the three and six months ended MarchJune 31,30, 2026 and 2025:

The following table sets forth the cancellation rates for each of our homebuilding segments for the three and six months ended MarchJune 31,30, 2026 and 2025:

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Northern Region. During the three months ended MarchJune 31,30, 2026, revenue in our Northern region decreased $33.5$35.7 million, from $410.4$488.3 million in the firstsecond quarter of 2025 to $376.9$452.6 million in the firstsecond quarter of 2026. This decrease in revenue was primarily the result of aan 9%8% decrease in the number of homes delivered, partially offset by a 1% increase in the average sales price of homes delivered. Operating income in our Northern region decreased $17.7$17.8 million from $60.6$76.0 million in the firstsecond quarter of 2025 to $42.9$58.2 million during the quarter ended MarchJune 31,30, 2026. This decrease in operating income was the result of a $17.5$15.5 million decline in our gross margin and a $0.2$2.3 million increase in selling, general and administrative expense. Our gross margin percentage declined 270160 basis points to 19.5%21.2% from 22.2%22.8% in the prior year’s firstsecond quarter primarily due to an increase in homebuyer incentives and a $2.1$7.0 million increase in lot costs compared to prior year. The average sales price in 2026 reflects a reduction of $8,600 per home when compared to 2025 due to increased homebuyer incentive costs including mortgage interest rate buydowns when compared to 2025.buydowns.

Selling, general and administrative expense increased $0.2$2.3 million, from $30.3$35.3 million for the quarter ended MarchJune 31,30, 2025 to $30.5$37.6 million for the quarter ended MarchJune 31,30, 2026 and increased 70110 basis points as a percentage of revenue to 8.1%8.3% in 2026's firstsecond quarter from 7.4%7.2% in 2025's firstsecond quarter. The increase in selling, general and administrative expense was attributable to a $0.5$0.9 million increase in general and administrative expense partially offset byand a $0.3$1.4 million decreaseincrease in selling expense. The increase in general and administrative expense was due to a $0.3$0.6 million increase relatedin to landcompensation-related expenses and a $0.2$0.3 million increase in compensationmiscellaneous relatedexpense, expenses.including costs associated with research, design and development. The decreaseincrease in selling expense was due to a $0.5 million decreaseincrease in salesadvertising expense, a $0.4 million increase in expenses related to our model homes and realtor commissions produced by the lower number of homes delivered offset in part by a $0.2$0.5 million increase in costs associated with our model homes and sales offices, including compensation.compensation-related expenses.

During the three months ended MarchJune 31,30, 2026, we experienced a 4%16% decreaseincrease in new contracts in our Northern region from 1,065873 in the firstsecond quarter of 2025 to 1,0261,016 in the firstsecond quarter of 2026. Homes in backlog decreased 19%4% from 1,3751,281 homes at MarchJune 31,30, 2025 to 1,1101,234 homes at MarchJune 31,30, 2026 as a result of more inventory homes sold in 2026the firstsecond quarter of 2026 compared to prior year. The average sales price in backlog increased approximately 3%1% to $570,000$567,000 at MarchJune 31,30, 2026 compared to $556,000$563,000 at MarchJune 31,30, 2025 primarily due to the mix of homes being sold. During the three months ended MarchJune 31,30, 2026, we opened eighttwelve new communities in our Northern region compared to opening sixteeneight during 2025's firstsecond quarter. Our monthly absorption rate in our Northern region was 3.7 per community in the firstsecond quarter of 2026 compared to 3.83.0 in the firstsecond quarter of 2025 due to an increase in new contracts and a decrease in newaverage contracts.community count.

Southern Region. During the three month period ended MarchJune 31,30, 2026, revenue in our Southern region decreased $21.6$64.6 million, from $534.2$642.9 million in the firstsecond quarter of 2025 to $512.6$578.3 million in the firstsecond quarter of 2026. This 4%10% decrease in revenue was the result of aan 6%8% decrease in the average sales price of homes delivered ($28,000$37,000 per home delivered), offset in part byand a 1%5% increasedecrease in the number of homes delivered (1267 units), andoffset in part by a $5.3$15.6 million increase in land sale revenue. Operating income in our Southern region decreased $34.5$34.4 million from $80.4$84.3 million in the firstsecond quarter of 2025 to $45.9$49.9 million in the firstsecond quarter of 2026. This decrease in operating income was the result of a $32.4$36.5 million decline in our gross marginmargin, andpartially offset by a $2.1 million increasedecrease in selling, general, and administrative expense. Our gross margin percentage declined 530380 basis points from 24.4%22.4% in prior year’s firstsecond quarter to 19.1%18.6% in the firstsecond quarter of 2026. The decline in our homebuilding gross margin was primarily due to the decrease in the number of homes delivered, a decrease in the average sales price of homes delivereddelivered, and a $4.2$1.8 million increase in lot costs.costs offset in part by increase in land sales. Increased homebuyer incentive costs, including mortgage interest rate buydowns, decreased the average sales price of homes delivered by $6,200$8,500 per home when compared to 2025.

Selling, general and administrative expense increaseddecreased $2.1 million from $49.9$59.6 million in the firstsecond quarter of 2025 to $52.0$57.5 million in the firstsecond quarter of 2026 andbut increased 8060 basis points as a percentage of revenue to 10.1%9.9% in the firstsecond quarter of 2026 from 9.3% in the firstsecond quarter of 2025. SellingThe decrease in selling, general and administrative expense increasedwas $2.7attributable to a $1.2 million decrease in selling expense and a $0.9 million decrease in general administrative expense. The decrease in selling expense was due to a $1.5$2.9 million increasedecrease in realtor and sales commissionscommissions, andpartially offset by a $1.2$1.7 million increase in costs related to our sales office, including compensation and advertising.advertising Generalexpenses. The decrease in general and administrative expense decreased $0.6 millionwas due to a reduction$0.6 million decrease in compensation-related expenses, and a $0.3 million decrease of miscellaneous expenses.

During the three months ended MarchJune 31,30, 2026, our new contracts in our Southern region increased 14% from 1,2271,205 in the firstsecond quarter of 2025 to 1,3241,371 in the firstsecond quarter of 2026, which was primarily due to new communities.2026. Homes in backlog decreased by 23%8% from 1,4721,296 homes at MarchJune 31,30, 2025 to 1,1351,192 homes at MarchJune 31,30, 2026, primarily as a result of weakened demand and a shift in demand to inventory homes which offer incentives compared to last year.year offset in part by improved sales in current quarter. Average sales price in backlog decreased to $503,000$508,000 at MarchJune 31,30, 2026 from $540,000$543,000 at MarchJune 31,30, 2025 primarily due to the mix of homes being sold.sold, including an increase in inventory homes. During the three months ended MarchJune 31,30, 2026, we opened 1415 new communities in our Southern region compared to opening 1115 communities during 2025's firstsecond quarter. Our monthly absorption rate in our Southern region remainedimproved atto 3.23.3 per community in the firstsecond quarter of 2026 from 3.1 in the firstsecond quarter of 2025.

Financial Services. Revenue from our mortgage and title operations decreasedincreased 1%3% to $31.2$32.3 million in the firstsecond quarter of 2026 from $31.5 million in the firstsecond quarter of 2025 due to lowerhigher margins on loans soldsold, andan a decreaseincrease in the average loan amount from $406,000$403,000 in the quarter ended MarchJune 31,30, 2025 to $401,000$405,000 in the quarter ended MarchJune 31,30, 2026,2026 partiallyand offset bya higher capture rate during the period compared to prior year’s firstsecond quarterquarter, andpartially offset by a 3% increasedecrease in the number of loan originations from 1,5301,865 in 2025's firstsecond quarter to 1,5791,817 in the firstsecond quarter of 2026.

Our financial services segment experienced a $2.0$0.5 million decrease in operating income in the firstsecond quarter of 2026 compared to 2025's firstsecond quarter, which was primarily due to a $1.7$1.4 million increase in general and administrative expense, which was primarily the result of ana $0.9 million increase in compensation-related expenses, and thea decrease$0.5 million increase in revenuemiscellaneous expenses relating to information systems compared to the firstsecond quarter of 2025 described above.2025.

At MarchJune 31,30, 2026, M/I Financial provided financing services in all of our markets. Approximately 96% of our homes delivered during the firstsecond quarter of 2026 were financed through M/I Financial, compared to approximately 92% in the firstsecond quarter of 2025. Capture rate is influenced by financing availability and competition in the mortgage market and can fluctuate from quarter to quarter.

Corporate Selling, General and Administrative Expense. Corporate selling, general and administrative expense increased $0.6$1.7 million from $18.9$22.1 million for the firstsecond quarter of 2025 to $19.5$23.8 million for the firstsecond quarter of 2026. This increase resulted from a $0.3 million increase in compensation-related expenses, a $0.3 million increase in depreciation, a $0.3 million increase in computer related expense, a $0.3 million increase in advertising expenses and a $0.6$0.5 million increase in miscellaneous expenses offset in part by a $0.3 million decrease in compensation-related expenses.

Interest Income, net of Interest Expense. The Company earned $3.1$3.3 million of interest income - net for the three months ended MarchJune 31,30, 2026 compared to $5.2$4.4 million for the three months ended MarchJune 31,30, 2025. This decrease was primarily due to a lower average cash balance on hand compared to prior year.

Income Taxes. Our overall effective tax rate was 23.9%24.4% for both the three months ended MarchJune 31,30, 2026 and 24.3% for the three months ended MarchJune 31,30, 2025.