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

In general, housing demand is adversely affected by increases in interest rates and a lack of availability of mortgage financing. Most of our buyers finance their home purchases through our mortgage joint venture or third party lenders providing mortgage financing. If mortgage interest rates increase and, consequently, the ability of prospective buyers to finance home purchases is adversely affected, our home sales and cash flow may be adversely affected and the impact may be material. Additionally, rapid increases in interest rates may negatively impact affordability of a home purchase for existing buyers in backlog if they have not yet locked in the interest rate for their loan. This could lead to an increase in the number of contract cancellations in our reported sales order numbers. These risks can also indirectly impact us to the extent our customers need to sell their existing homes to purchase a new home from us if the potential buyer of their home is unable to obtain mortgage financing. It may also impact the desire for existing homeowners to sell their homes as they may potentially be forfeiting a substantially lower interest rate on their existing home for a higher interest rate mortgage on a new home. While interest rates have stabilized, they are still elevated.elevated from previously historically low levels. We may have the ability to offset the impact of rising interest rates on affordability by purchasing interest rate locks; however, the cost of these rate locks is expensive and there is no guarantee that interest rate locks will be available for us to purchase at desirable terms, or if they are available, there is no guarantee that they will be desired as an alternative by potential customers.

A homebuyer's ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the FHA, the VA, Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). Although no material changes are currently anticipated, ifIf credit standards or appraisal guidelines are tightened, or mortgage loan programs are curtailed, potential buyers of our homes may not be able to obtain necessary mortgage financing. There can be no assurance that these programs will continue to be available or that they will be as accommodating as they currently are. Continued legislative and regulatory actions andor more stringent underwriting standards could have a material adverse effect on our business if certain buyers are unable to obtain mortgage financing. A prolonged tightening of the financial markets could also negatively impact our business.

We, like other homebuilders, may be adversely affected during periods of high inflation, mainly from higher land, construction, labor and materials costs. Inflation could increase our cost of financing, materials and labor and could cause our financial results and profitability to decline. Traditionally, we have attempted to pass cost increases on to our customers through higher sales prices, although in recent years we have had to absorb higher materialland development and labor costs, which have negatively impacted our profitability.

Downturns in the economy, or specifically in the homebuilding industry, require us to re-evaluate the value of our land holdings, which could result in significant impairment charges and decrease both the book value of our assets and stockholders’ equity. During the last significant downturn that began in 2008, and in certain isolated circumstances afterward, we had to impair many of our real-estate assets to fair-value, incurring large impairment charges which negatively impacted our financial results and financial position. During the year ended December 31, 2025, we recognized relatively smaller impairment charges due to softening economic conditions.

Home warranty and construction defect claims are common in the homebuilding industry and can be costly. We sometimes encounter construction defect issues that may be alleged to be widespread within a single community or geographic area. See Note 1 - “Business and Summary of Significant Accounting Policies” and Note 16 - "Commitments and Contingencies" in the accompanying consolidated financial statements for additional information regarding warranty reserves and adjustments. In order to account for future potential warranty and construction defect obligations, we establish a warranty reserve in connection with every home closing. Additionally, we maintain general liability insurance and generally require our subcontractors to provide a warranty and indemnity to us and insurance coverage for liabilities arising from their work; however, we cannot be assured that our warranty reserves and insurance and those subcontractors warranties, insurance and indemnities will be adequate to cover all warranty and construction defect claims for which we may be held responsible. For example, we may be responsible for applicable self-insured retentions, and certain claims may not be covered by insurance or may exceed applicable coverage limits, which could be material to our financial results. In addition, the cost of insuring against construction defect and product liability claims is high, and the amount of coverage offered by insurance companies ismay currentlynot limited.be sufficient to cover all costs. There can be no assurance that this coverage will not be further restricted and become more costly. If the limits or coverages of our current and former insurance programs and/or those of our subcontractors prove inadequate, or we and/or our subcontractors are unable to obtain adequate, or reasonably priced, insurance against these types of claims in the future, or the amounts currently provided for future warranty or insurance claims are inadequate, we may experience losses that could negatively impact our financial results.

During significant economic downturns, we may forfeit significant amounts of deposits and write off significant amounts of related pre-acquisition costs related to projects we no longer deem feasible if they are not projected to generate acceptable returns. At December 31, 2024,2025, we had Deposits on real estate under option or contract of $192.4$174.2 million, of which $176.8$161.5 million related to committed projects. Although our participation in land options is limited at this time, a downturn in the homebuilding market may cause us to re-evaluate the feasibility of our optioned projects which may result in us forfeiting associated deposits, which would reduce our assets and stockholders’ equity. For example, during 2025 we recognized charges on terminated land contracts of $39.4 million as we elected to terminate certain positions to release capital to top-grade our land portfolio as better opportunities become available.

We have homebuilding operations in Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina,Carolina and South Carolina, and Tennessee.Carolina. Although we have, in recent years, expanded our operations to new markets, our geographic diversification is still more limited than some of our competitors and could adversely impact us if the homebuilding business in our current markets should decline, since we may not have a balancing opportunity in other geographic regions.

Our commitment and disclosures related to sustainability matters expose us to risks that could adversely affect our reputation and performance.

WeAlthough we have not publicly announced any carbon targets, we voluntarily published our fourthfifth annual ESGS&CR reportReport in 20242025 which followed certain reporting frameworks that we believe are of value to our investors and other stakeholders. If our ESGS&CR practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted. Further, our failure or perceived failure to pursue or fulfill our goals and objectives or to satisfy various reporting standards on a timely basis, or at all, could have similar negative impacts or expose us to government enforcement actions and private litigation. For example, the SEC and California havehas recently adopted climate-related reporting and audit requirements that would require us to gather information from our third-party business partners over which we are unable to exert control or significant influence. If our third-party business partners are unwilling or unable to provide adequate information, we may be unable to fully comply with future mandatory reporting and audit requirements at the state or federal level.

While we continuously assess and enhance our cybersecurity controls, we cannot assure you that cyber attacks will not occur in the future. Such events could have a significant and extended disruption to the functioning of our information technologyIT and other digital resources, damage our reputation and cause us to lose customers and sales, result in the unintended disclosure or the misappropriation of proprietary, personal and confidential information (including information about our homebuyers, employees and business partners), and require us to incur significant expense to address and remediate these kinds of issues. The release of confidential information may also lead to litigation or other proceedings against us by affected individuals and/or business partners and/or by regulators, and the outcome of such proceedings, which could include penalties or fines, could have a material and adverse effect on our results of operations and financial position and reputation. In addition, the costs of maintaining adequate protection against such threats, depending on their evolution, pervasiveness and frequency and/or government-mandated standards or obligations regarding protective efforts, are high and expected to continue to increase in the future and may be material to our results of operations and financial position.

See Item 1C - “Cybersecurity" in Part I of this FormAnnual 10-KReport for additional information regarding our cybersecurity risk management, strategy and governance.

With concern from government agencies and the general public over the effects of climate change on the environment, we may be subject to additional regulatory responses to reduce greenhouse gas emissions and combat climate change that may increase our costs particularly as they relate to land development and home construction activities. For example, in California, all homes constructed are now required to have solar panels, which we offer as standard feature for homes built in the state. Such compliance has not had a material impact on our operations; however, it could increase our operating and compliance costs in the future or require additional technology and capital investment. These and other similar environmental laws or permit restrictions may also result in production delays and may prohibit or severely restrict development in certain environmentally sensitive or geographic areas. Environmental regulations can also have an adverse impact on the use, availability and price of certain raw materials,materials suchand asnatural lumber.resources. While we believe we are complying in all material respects with existing climate-related government standards and regulations applicable to our business, we also cannot predict our future exposure given the rapidly changing nature of environmental matters.

ThereIn isthe afuture, varietythere ofmay be new regulations being adopted and legislation being enacted, or considered for enactment, at the federal, state, local and international levels relating to energy and climate change. This legislation relates to items such as carbon dioxide emissions control and building codes that impose energy efficiency standards. New building code requirements that impose stricter energy efficiency standards could significantly increase our cost to construct homes. As climate change discussions continue, legislation and regulations of this nature could become more costly to comply with. Similarly, energy-and climate-related initiatives affect a wide variety of companies throughout the United States and the world and because our operations are heavily dependent on significant amounts of raw materials, such as lumber, steel, and concrete, they could have an indirect adverse impact on our operations and profitability to the extent the manufacturers and suppliers of our materials are directly or indirectly burdened with expensive cap and trade and similar energy and climate-related regulations.

Our wholly-owned title company, Carefree Title, provides title insurance and closing settlement services for our homebuyers. The title and settlement services provided by Carefree Title are subject to various regulations, including regulation by state banking and insurance authorities. These laws and regulations include many compliance requirements, including but not limited to licensing, consumer disclosures, fair lendingdisclosures and real estate settlement procedures. As a result, our operations are subject to regular, extensive examinations by the applicable agencies. Additional future regulations or changing rule interpretations and examinations by regulatory agencies may result in more stringent compliance standards and could adversely affect the results of our operations.

Our mortgage joint venture is engaged in mortgage broker activities and provides services to our homebuyers. Potential changes to federal and state laws and regulations could have the effect of limiting our activities or how our mortgage joint venture conducts its operations and this could have an adverse effect on our results of operations. The mortgage industry remains under intense scrutiny and continues to face increasing regulation at the federal, state and local level. Although we do not originate mortgages, we may be directly or indirectly subject to certain of these regulations. In addition, if we are determined to have violated federal or state regulations, we could face the loss of our licenses or other required approvals or we could be subject to fines, penalties, civil actions or we could be required to suspend our activities, each of which could have an adverse effect on our reputation, results and operations.

Demand for our homes is dependent on a variety of macroeconomic factors, such as employment levels, interest rates, changes in stock market valuations, consumer confidence, housing demand, availability of building materials, availability of financing for home buyers, availability and prices of new homes compared to existing inventory, and demographic trends. These factors can be significantly adversely affected by a variety of factors beyond our control. Future disruptions and governmental actions combined with any associated economic and/or social instability or distress resulting from an epidemic or pandemic,pandemic may have an adverse impact on our results of operations, financial condition and cash flows.

The words “believe,” “expect,” “anticipate,” “forecast,” “plan,” “intend,” “may,” “will,” “should,” “could,” “estimate,” "target," and “project” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. All statements we make other than statements of historical fact are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933 (the "Securities Act"), and Section 21E of the Exchange Act. Forward-looking statements in this Annual Report include statements concerning our belief that we have ample liquidity; our cash management strategy and intentions; our goals, strategies and strategic initiatives including our all spec and move-in ready strategy and our focus on external real estate brokers as customers, and the anticipated benefits relating thereto; our intentions and the expected benefits and advantages of our product and land positioning strategies, including with respect to our focus on the first-time and first move-up buyer and housing demand for affordable homes; the benefits of our financing incentive programs; the benefits of and our intentions to use options to acquire land; our preselected design collections strategy; our exposure to supplier concentration risk and other matters concerning our supply chain; our delivery of substantially all of our backlog existing as of year end; our positions and our expected outcome relating to litigation and regulatory proceedings in general; that we may repurchase, redeem or retire our debt and equity securities; our non-use of derivative financial instruments; expectations regarding our industry and our business into 20252026 and beyond; the demand for and the pricing of our homes; our land and lot acquisition strategy, including that we will redeploy cash to acquire well-positioned finished lots and that we may participate in joint ventures or other opportunities; that we may expand into new markets; the availability of labor and materials for our operations; that we may seek additional debt or equity capital; our expectation that existing guarantees, letters of credit and performance and surety bonds will not be drawn on; the sufficiency of our insurance coverage and warranty reserves; the sufficiency of our capital resources to support our business strategy; the sufficiency of our land pipeline; the impact of new accounting standards and changes in accounting estimates; trends and expectations concerning future demand for homes, sales prices, sales orders, construction cycle times, cancellations, labor, construction and materials costs and availability, gross margins, profitability, liquidity, land costs, community counts and profitability and future home supply and inventories; our future cash needs and sources; the impact of seasonality; that we intend to pay dividends in the future; and our future compliance with debt covenants.

We believe that the execution of our all-spec strategy of move-in ready homes with a commitment to affordability will drive strong performance of theour key financial goals such as higherstrong home closing revenue,revenue strongand home closing gross margin, controlling selling, and general and administrative costs, and maintaining sufficient liquidity.

OurDespite resultsa fortougher 2024economic reflectbackdrop, the continuing favorable market conditions for affordable, move-in ready homes. Wewe ended 20242025 with 15,61115,026 closings, ourdown highest closing volume in Company history, up 11.7%3.7% from 13,97615,611 closings in 2023.2024. We also achieved recordHome order volume for the year ended December 31, 2025 of 14,60614,650 units,units upwas 10.7% over 13,193 in 2023, due to a 7.5% year-over-year increase in orders pace to 4.3 per month in 2024 combinedconsistent with aprior 1.4%year, as an 11.6% increase in average active community count.count Ourwas strategymostly alsooffset favorably impacted cancellations as the length of time between sale and closing is shortened, contributing toby a 9.3% year-over-year decrease in orders pace. A cancellation rate of 9.4%11% forin 2025 was higher than 9% in 2024, but still below our historical company average and we believe that this demonstrates the fullbenefits yearof 2024,a wellshorter belowtimeline historicalbetween averageshome order and improvedhome fromclosing 12.8%that foris thea fullproduct yearof 2023.our move-in ready homes with a 60-day closing ready commitment. Reduced construction cycle times and our all spec strategy led to record backlog conversions throughout the full year 2024,2025, resulting in 39.4%24.4% fewer homes in backlog at December 31, 2024,2025, with 1,168 units valued at $440.6 million compared to 1,544 units valued at $629.5 million compared to 2,549 units valued at $1.1 billion at December 31, 2023.2024.

Total home closing revenue of $6.3$5.8 billion for the year ended December 31, 20242025 increaseddecreased 4.7%9.1% from $6.1$6.3 billion in 2023,2024, due to 11.7%3.7% higherfewer home closing volumeclosings and 6.3%a lower5.6% reduction in ASP on closings. Home closing gross margin was 24.9%19.7% for the year ended December 31, 2024,2025 consistentcompared withto 24.8%24.9% in 2023,2024. asThe loweryear-over-year directmargin costs,decline leveragewas ofdue higherto home closing revenue on overhead costs and shorter construction cycle times were offset by greaterincreased utilization of financing incentives andincentives, higher lot costs, and reduced leverage of fixed costs on lower home closing revenue, all of which offset savings in direct costs and faster cycle times. Home closing gross margin was also impacted by $39.4 million in charges incurred related to terminated land contracts, $16.5 million of real estate-related impairments, and $4.3 million of severance costs. Excluding these costs, adjusted home closing gross margin was 20.8% for the year ended December 31, 2025, compared to adjusted home closing gross margin of 25.0% in 2024 which included $6.7 million in terminated land contracts. Financial services profit of $18.6 million increased from $14.4 million in the same period of 2024 due to fewer charges in the current period related to the expiration of interest rate forward commitments. Commissions and other sales costs of $409.1$404.4 million for the full year ended December 31, 20242025 increaseddecreased $24.2$4.7 million from the prior year period due to higherlower home closing revenue.revenue, Commissionsoffset by higher maintenance and other salesutility costs wereas 6.5%a result of homehaving closingmore revenuespec homes in 2024, relatively consistent with the prior year.inventory. General and administrative expenses of $230.9$211.8 million for the year ended December 31, 20242025 weredecreased 3.6%$19.1 of home closing revenue and improved 20 basis pointsmillion year over year, primarily due to leverage of higher home closing revenue on fixed overhead expenses and lower performance-based compensation.compensation, which was partially offset by increased technology spend and severance costs. Other income, net of $45.2$44.1 million in 20242025 decreasedwas 5.8%relatively fromflat thewith prior year primarily due to lower interest income earned on smaller cash balances. In May 2024 we redeemed the remaining $250.0 million of our 6.00% Senior Notes due 2025 (the "2025 Notes"), resulting in charges of $0.6 million reflected in Loss on early extinguishment of debt, compared with charges of $0.9 million in 2023.year. Earnings before income taxes of $584.6 million in 2025 decreased 41.7% from $1.0 billion in 2024 increased 5.6% from $949.4 million in 2023.2024. Our effective tax rate for the year ended December 31, 20242025 was 21.6%22.5% as compared to 22.2%21.6% in 2023,2024, leading to net income of $786.2$453.0 million and $738.7$786.2 million for the years ended December 31, 20242025 and 2023,2024, respectively.

We believe that the investments in our new communities designed for the first-time and first move-up homebuyer, our move-in ready homes with our recently introduced 60-day closing ready commitment, and our partnership with external realtors create a differentiated strategy that has aided us in our growth in the highly competitive new home market.

•Increasing homeowner satisfaction by offering energy-efficient homes that comeare equippedcleaner withand a suite of home automation standard features.healthier.

•Achieving or maintaining a top 5 market position in all of our marketsmarkets, and maintaining our status as a top 5 national builder (based on homes closed in 2024);

•Targeting a strong, yet sustainable, orders pace through the use of consumer, marketconsumer and potentially artificial intelligencemarket research to ensure that we build homes that offer our buyers their desired features and amenities;

•Carefully managing our liquidity and a strong balance sheet. We ended the year with a 20.6%26.0% debt-to-capital ratio and a 11.7%16.9% net debt-to-capital ratio, after issuing $575.0$500.0 million of convertible senior notes;

•Balancing return of capital to our shareholdersstockholders with internal growth goals, utilizing both share repurchases and dividend payments;

•Promoting a positive environment for our employees through our commitment to inclusioninclusion, culture, and belonging, and providing market-competitive benefits in order to develop and motivate our employees, minimize turnover and maximize recruitment efforts.

We have established various accounting policies that govern the application of United States generally accepted accounting principles (“GAAP”) in the preparation and presentation of our consolidated financial statements. Our significant accounting policies are described in Note 1 of the accompanying consolidated financial statements included in this FormAnnual 10-K.Report. Certain of these policies involve critical accounting estimates, which are significant judgments, assumptions and estimates by management in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We are subject to uncertainties such as the impact of future events, economic, environmental, political and regulatory factors and changes in our business environment; therefore, actual results could differ from these estimates. Accordingly, the accounting estimates used in the preparation of our financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Changes in estimates are revised when circumstances warrant. Such changes in estimates and refinements in methodologies are reflected in our reported results of operations and, if material, the effects of changes in estimates are disclosed in the notes to our consolidated financial statements. The judgments, assumptions and estimates we use and believe to be critical to our business are based on historical experience, knowledge of the accounts, industry practices, and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we have made, actual results may differ from these judgments and estimates and could have a material impact on the carrying values of assets and liabilities and the results of our operations.

The critical accounting estimates that we deem to involve the most difficult, subjective or complex judgementsjudgments are as follows:

Real estate inventory is stated at cost unless the community or land is determined to be impaired, at which point the inventory is written down to fair value as required by Accounting Standards Codification (“ASC”) 360-10, Property, Plant and Equipment. Real estate inventory includes the costs of land acquisition, land development and home construction, capitalized interest, real estate taxes, and direct overhead costs incurred during development and home construction that benefit the entire community, less impairments, if any. Land and development costs are typically allocated and transferred to homes when home construction begins. Home construction costs are accumulated on a per-home basis, while commissions and other sales costs are expensed as incurred. Cost of home closings includes the specific construction costs of the home and all related allocated land acquisition, land development and other common costs (both incurred and estimated to be incurred) that are allocated based upon the total number of homes expected to be closed in each community or phase. Any changes to the estimated total development costs of a community or phase are allocated to the remaining homes in that community or phase. When a home closes, we may have incurred costs for materials and services that have not yet been paid. We accrue a liability to capture such obligations in connection with the home closing which is charged directly to Cost of home closings.

We capitalize qualifying interest to inventory during the development and construction periods. Capitalized interest is included in cost of closings when the related inventory is closed. Included within our Real estate inventory is land held for development anddevelopment, land held for sale.sale, and mothball communities. Land held for development primarily represents land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. For these parcels, we have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. Mothball communities represent communities where we have elected to stop development of an existing actively selling community because we believe the economic performance of the community would be maximized by deferring development for a period of time to allow market conditions to improve. We do not capitalize interest for these inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.

At December 31, 2024,2025, our warranty reserve was $32.7$26.7 million, reflecting an accrual of 0.1% to 0.5% of a home’s sale price depending on our loss history in the geographic area in which the home was built. A 10% increase in our warranty reserve rate would have increased our accrual and corresponding cost of home closings by approximately $2.2$1.9 million in 2024.2025. As a result of the routine review described previously, there were no adjustments to our reserve balance during the year ended December 31, 2025, and we decreased our reserve balance by $1.0 million related to specific case reserves during the year ended December 31, 2024. There were no adjustments to our reserve balance during the year ended December 31, 2023. See Notes 1 and 16 in the accompanying consolidated financial statements for more information. While we believe that the warranty reserve is sufficient to cover our projected costs, there can be no assurances that historical data and trends will accurately predict our actual warranty costs. Furthermore, there can be no assurances that future economic, financial or legislative developments might not lead to a significant change in the reserve.

Companywide. We achievedclosed record15,026 homes with home closing volume of 15,611 units in 2024, compared to 13,976 units in 2023. Home closing revenue of $6.3$5.8 billion for the year ended December 31, 20242025, increasedcompared 4.7%to from15,611 $6.1units and home closing revenue of $6.3 billion in the2024. priorThe period,lower ashome theclosing 11.7%revenue higherwas driven by 3.7% lower home closing volume was partially offset byand a 6.3%5.6% lowerdecrease in ASP on closings. The lowerreduction in ASP onis closingsthe wasresult caused byof higher utilization of financing incentivesincentives. and a shift in geographic and product mix. Entry-level homes represented 91% of closings in 2024, compared to 85% in 2023. We also achieved record orders in 2024, with 14,606 orders increasing 10.7% from 13,193 in 2024. The improvement inHome order volume of 14,650 units was drivenrelatively primarilyflat year over year, as average active community count increased 11.6% but was offset by a 7.5% increase inlower orders pace of 3.9 homes per month, as compared to 4.3 homes per month combined with a 1.4% increase in average2024. active community count. Higher order volume offset by a 5.3% decrease in ASP on orders led to a 4.8% increase in homeHome order value ofdeclined $6.03.8% to $5.7 billion for the year ended December 31, 2024,2025, comparedfrom to $5.7$6.0 billion in the prior yearyear, period.due to a 4.1% decrease in ASP on orders. The lower ASP on both closings and orders was also due in part to geographic mix shift, as the West Region with our highest ASPs comprised a smaller portion of our total closings and orders in 2025. The cancellation rate of 9.4%11% in 20242025 improvedincreased from 12.8%9% in 20232024, andas isthe result of buyer hesitancy after initial sale from affordability concerns. Despite the year over year increase, the 2025 cancellation rate continues to be below historical normal levels, partially due to our move-in ready strategy which shortens the period between sale and closing.levels. We ended the year with 1,168 homes in backlog valued at $440.6 million, compared to 1,544 homes in backlog valued at $629.5 million, compared to 2,549 homes in backlog valued at $1.1 billion, decreases of 39.4%24.4% and 42.1%,30.0%, respectively, compared to 2023.2024. The number of homes in backlog decreaseddeclining year over year dueis tothe result of our higher backlog conversion rates throughout 2024.2025, as well as lower orders in the fourth quarter of 2025 due to market conditions. As anticipated with our strategy of offering move-in ready homes, we are selling a higher percentage of spec homes later in the construction cycle, contributing to the higher backlog conversion rates in all of our regions.

West. The West Region generated $2.2$1.8 billion in home closing revenue for the year ended December 31, 2024,2025, a 5.5%17.7% increasedecrease from $2.1$2.2 billion in the prior year, due to a 10.1%15.6% increase inlower home closing volume that was partially offset byand a 4.2%2.6% decrease in ASP on closingsclosings. as a result of geographicGeographic mix shift within the region, product shift mix to more entry-level homes,region and increased utilization and cost of financing incentives.incentives Orderboth valuecontributed to the lower ASP on closings. Home order volume declined 15.3% to 3,571 units, resulting entirely from a 16.7% lower orders pace of $2.13.5 billionhomes per month compared to 4.2 per month in 2024the prior year, as the average active community count was relatively consistent withyear-over-year. priorLower year,home asorder volume contributed nearly entirely to a 5.8%15.8% increasedecrease in order volumevalue of $1.8 billion, as ASP on orders remained relatively flat year over year. The West Region's cancellation rate of 9% for the year ended December 31, 20242025 towas 4,215the homeslowest from 3,983rate in 2023 was offset by a 3.7% decrease in ASP on orders. Order volume increased due to a 13.5% higher orders pace per community to 4.2 homes per month compared to 3.7 per month in 2023, more than offsetting the 6.0%Company decreaseand inconsistent averagewith activelyprior selling communities. The West Region's cancellation rate of 9.4% improved significantly from 14.2% in 2023.year. Backlog of 185 homes valued at $91.9 million at December 31, 2025 was down 57.5% and 57.1%, respectively, from 435 homes valued at $214.4 million at December 31, 20242024, wasresulting downfrom 41.7%the combined effect of fewer orders and 43.6%,higher respectively,backlog fromconversion 746rates homesin valued2025 atas $379.8compared millionto at December 31, 2023.2024.

Central. The Central Region, made up of our Texas markets,Region closed 4,8345,264 homes and generated home closing revenue of $1.7$1.8 billion for the year ended December 31, 20242025, compared to 4,4865,525 homes and $1.8$2.0 billion in 2023.2024. The 7.8%8.9% increaselower home closing revenue was the result of the combined impact of 4.7% and 4.4% decreases in home closing volume wasand fullyASP offseton byclosings, arespectively. 10.2%The decreasedecline in ASP on closings, which led to the 3.3% lower home closing revenue. ASP on closings decreasedis primarily due to productgreater shiftutilization mixof to more entry-level homes and higherfinancing incentives. The Central Region order volume of 4,5085,240 homes increased 5.1%1.5% fromyear 4,291,over whileyear, due entirely to a 2.2% increase in average active community count as orders pace was consistent year over year. Orders pace of 4.7 homes per month was the highest pace in the Company for both years. Home order value decreasedof 3.1% to $1.6$1.9 billion comparedfor tothe $1.7year billionended December 31, 2025, was relatively flat year over year, as the increase in 2023order duevolume towas offset by a 7.7%2.3% decrease in ASP on orders. The increase in order volume was due to an 11.6% higher orders pace of 4.8 homes per month in 2024, as average actively selling communities decreased 4.8% year over year. The Central Region cancellation rate of 10.3%11% in 20242025 was downup from 13.6%10% in 2023.2024. The Central Region ended the year with 442457 homes in backlog valued at $159.5$165.0 million, compared to 768481 homes in backlog valued at $289.4$177.5 million inat 2023.December 31, 2024.

Land Closing Revenue and Gross Profit (dollars in thousands)

OtherHome OperatingClosing InformationGross Profit (dollars in thousands)

Financial services profit. Financial services profit represents the net profit of our financial services operations, including the operating profit generated by our wholly-owned title and insurance companies, Carefree Title and Meritage Insurance, respectively, as well as our portion of earnings from a mortgage joint venture. Financial services profit of $14.4$18.6 million for the year ended December 31, 20242025 increased from $12.5$14.4 million in the prior year,year due to fewer charges related to expired and unused interest rate forward commitments in the current year as highercompared hometo closingthe volumeprior generatedyear greater title and insurance company profits.period.

The homebuilding marketsector continued to beexperience challengedsofter inthan expected demand during the firstsecond quarter of 2026, due to persistent affordability challenges andconcerns, diminished consumer confidence,confidence and economic impacts from the ongoing military actions in Iran, which waswere furtherexacerbated depressedearlier in the year by severe winter storms and military operations in Iran which we believe drove increasing interest rates, gas prices and inflation.storms. While U.S demographics continue to support demand for our affordable, move-in ready homes from millennial, Gen Z and baby boomer generationsgenerations, continues,these buyers are increasingly reliant on financing assistance to overcome market uncertainty and manage monthly payments.payments and do not feel urgency to commit to a near-term purchase. Our ability to offer financing incentives, including interest rate locks and buy-downs, remains a key differentiator,differentiator primarilywhen compared to resale homes, whereas individual sellers are typically not able to provide such incentives. WhileWe webelieve face headwinds inthat the current environment,environment wewill acknowledgeremain thatchallenging capturingand demandwill requiresrequire higher than anticipated incentive utilization, even as we look to optimize every asset and prioritize margin preservation.

Construction cycle times remained under 110 calendar days, below our historical normalized time of approximately 120 days and materially improved from more than 150 days over the last several years as the supply chain and labor markets return to normal conditions. Our all-spec strategy also minimizes variability and creates efficiencies through repeatability. Land costs remain elevated following years of historically high land acquisition and development costs,costs. however,Our ourlarger scale and purchasing power allow us to secure volume discounts from national vendors,vendors for our construction materials as the market has re-aligned its capacity needs, helping offset some of this pressure.

We believe that the execution of our all-spec strategy of move-in ready homes with a commitment to affordability appropriately focuses on our key financial goals such asof strong home closing revenue and home closing gross margin, controlling selling, and general and administrative costs, and maintaining sufficient liquidity.

Home closing volume of 2,9673,725 homes in the three months ended MarchJune 31,30, 2026 was down 13.1%10.7% from 3,4164,170 homes in the same prior year period. Lower closing volume combined with a 5.0%3.8% decrease in average sales price ("ASP") on closings resulted in $1.1$1.4 billion in home closing revenue, a 17.5%14.1% decrease from $1.3$1.6 billion in the three months ended MarchJune 31,30, 2025. Lower home closing volume, closing ASPs and higher lot costs all drove home closing gross profit of $253.6 million in the three months ended June 30, 2026 compared to $341.3 million in the comparable prior year period. The lowerreduced ASP is aprimarily the result of increased utilization of incentives and geographic mix shift,shift and contributed to the firstsecond quarter 2026 home closing gross margin decline of 450280 basis points to 17.5%,18.3%, compared to 22.0%21.1% in the prior year period. The decrease in home closing gross margin was also attributable to reduced leverage of fixed costs on lower home closing revenue and higher lot costs, all of which were only partially offset by savings achieved in direct costs and shorter construction cycle times. LowerFinancial home closing volume and ASP on closings led to home closing grossservices profit of $193.8$5.3 million in the three months ended MarchJune 31,30, 2026 was relatively flat compared to $295.7$5.6 million in the comparable prior year period. Land closing gross loss of $0.3 million in the three months ended March 31, 2026 compared to land closing gross profit of $3.2 million in the comparable 2025 period. Financial services profit was $3.5 million in the three months ended March 31, 2026, flat with the prior year period. Commissions and other sales costs of $79.5$91.8 million in the three months ended MarchJune 31,30, 2026 decreased $15.2$17.0 million due primarily to lower home closing revenue. General and administrative expenses of $51.4$52.4 million in the three months ended MarchJune 31,30, 2026 decreased $5.6$2.8 million from the same period of 2025, largely due to savings in compensation expense and intentional reductions in discretionary expenses. Earnings before income taxes for the three months ended MarchJune 31,30, 2026 of $72.5$120.6 million decreased $87.6$72.5 million year over year from $160.2$193.1 million in the same period of 2025. The effective income tax rate of 23.7%24.8% for the three months ended MarchJune 31,30, 2026 increased slightly from 23.3%23.9% in the comparable period of 2025. The decrease in year-over-year volume and profitability resulted in net earnings of $55.3$90.6 million in the three months ended MarchJune 31,30, 2026 versus $122.8$146.9 million in the three months ended MarchJune 31,30, 2025.

Home orders of 3,6643,575 for the three months ended MarchJune 31,30, 2026 decreased 5.5%8.7% from 3,8763,914 home orders in the prior year quarter due to an 18.2%18.6% decrease in orders pace to 3.63.5 net homes per month, offset by the 17.0%13.8% increase in average active communities. Home order value duringfor the three months ended MarchJune 31,30, 2026 of $1.4 billion decreased 10.1%11.1% year-over-year, due to lower order volume and a 4.9%2.6% decrease in ASP on orders caused by the same factors discussed previously.previously for the second quarter of 2026. Our cancellation rate wasof 11%13% in the three months ended MarchJune 31,30, 2026,2026 comparedincreased tofrom 9%10% in the comparable 2025 period.period, We endedreflecting the firsttougher quarterselling of 2026 with 1,865 homes in backlog valued at $711.5 million, decreases of 6.9% and 12.4%, respectively, from March 31, 2025. The lower backlog units are due to lower order volume and a higher backlog conversion rate of 254% during the three months ended March 31, 2026, compared to 221% in the comparable 2025 period.environment.

We ended the firstsecond quarter of 2026 with 345340 active communities, the highest in Company history, up from 290312 at MarchJune 31,30, 2025 and 336 at December 31, 2025. We purchased approximately 2,6004,700 lots for $141.0$277.4 million, spent $185.1$405.8 million on land development, net of reimbursements, and started construction on 2,5246,453 homes during the threesix months ended MarchJune 31,30, 2026.

•Offering our customers affordable, move-in ready homes with a 60-day closing ready commitmentcommitment, aligned with their expectations for traditional resale housing timelines;

•Delivering affordable homes on a shorter timeline through simplification of production processes and maintaining levels of spec inventory that are aligned with our strategy;

•Increasing homeowner satisfaction by offeringOffering energy-efficient homes that are cleaner and healthier.healthier than resale homes.

•Carefully managing our liquidity and maintaining a strong balance sheet. We ended the firstsecond quarter of 2026 with a 26.6%26.8% debt-to-capital ratio and a 17.4%17.1% net debt-to-capital ratio;

The critical accounting estimates that we deem to involve the most difficult, subjective or complex judgments include real estate valuation and cost of home closings and warranty reserves. There have been no significant changes to our critical accounting estimates during the threesix months ended MarchJune 31,30, 2026 compared to those disclosed in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2025 Annual Report.

Companywide. In the three months ended MarchJune 31,30, 2026, we closed 2,9673,725 homes, 13.1%10.7% lower than 3,4164,170 closings in the three months ended MarchJune 31,30, 2025. The decrease in home closing volume combined with a 5.0%3.8% lower ASP on closings drove $1.1 billionresulted in home closing revenue of $1.4 billion for the three months ended MarchJune 31,30, 2026, 17.5%14.1% lower than the same period in 2025. Nearly 70% of our first quarter closings came from intra-quarter home orders. Home order volume in the three months ended MarchJune 31,30, 2026 of 3,6643,575 homes wasdeclined 5.5%8.7% lowerfrom than 3,8763,914 homes in the three months ended MarchJune 31,30, 2025, due to an 18.2%18.6% decrease in orders pace to 3.63.5 net homes per month in the three months ended MarchJune 31,30, 2026 which was partially offset by a 17.0%13.8% increase in average active communities. Demand has been meaningfully impacted by weak consumer confidence that has been weak for some time and recently exacerbated by economic and worldgeo-political events. The lower home order volume combined with 4.9% lower ASP on orders led to 10.1% lower homeHome order value of $1.4 billion for the three months ended MarchJune 31,30, 2026,2026 compareddeclined to11.1% $1.6from $1.5 billion in the prior year period.period, due to the lower home order volume combined with 2.6% lower ASP on orders. The decline in ASP on both closings and orders was caused by increased utilization of incentives anda shift in geographic mix. Order cancellations of 11%13% for the three months ended MarchJune 31,30, 2026 were up from 9%10% in the comparable 2025 period, but remains below our historical company average.period. We believe our low cancellation rates compared to industry averages reflects the benefits of a shorter timeline to home closing thatresulting is provided byfrom our move-in ready homes with a 60-day closing ready commitment. The first quarter of 2026 ended with 1,865 homes in backlog valued at $711.5 million, compared to 2,004 units valued at $812.4 million at March 31, 2025. The year over year decrease in backlog homes is the result of lower order volume and a higher backlog conversion rate of 254% during the three months ended March 31, 2026, compared to 221% in the same period of 2025.

West. The West Region generated $336.2$400.8 million in home closing revenue in the three months ended MarchJune 31,30, 2026, a 29.9%27.0% decrease compared to $479.6$549.2 million in the prior year period. The lower revenue was due entirely to 31.3%29.2% lower closing volume of 686825 homes in the three months ended MarchJune 31,30, 2026, compared to 9981,165 homes in the prior year. ASP on closings increased 2.0%3.1% due to geographic mix within the region. Home orders for the three months ended MarchJune 31,30, 2026 of 898762 were down 17.8%23.9% from 1,0931,001 in the prior year period, due largely to the combination of a 14.6%25.6% decrease in orders pacepace, andwhich 2.8%was fewerpartially offset by a 4.1% increase in average active communities. The orders pace of 3.52.9 homes per month in the three months ended MarchJune 31,30, 2026 is reflective of a tougher selling environment in most of the West Region's markets, and compares to 4.13.9 homes per month in the same period of the prior year. Home order value of $444.3$391.2 million for the three months ended MarchJune 31,30, 2026 decreased 17.7%19.3% due entirely to the lower order volume, as ASP on orders wasincreased flat6.0% year over year. The West Region had the lowest cancellation rate in the Company, at 6%9% for the three months ended MarchJune 31,30, 2026, andconsistent down from 7% inwith the prior year period. The West Region ended the first quarter of 2026 with 397 homes in backlog valued at $193.7 million, compared to 530 units valued at $262.6 million at March 31, 2025. The lower backlog is the combined effect of the lower orders in the first quarter of 2026, along with a record backlog conversion rate of 371% for the three months ended March 31, 2026 compared to 229% in the same period of 2025.

Central. The Central Region closed 1,1081,308 homes in the three months ended MarchJune 31,30, 2026, down 6.7%4.8% from 1,1871,374 in the prior year period. Home closing revenue of $376.3$446.7 million in the three months ended MarchJune 31,30, 2026 was 8.8%7.0% lower than $412.5$480.4 million in the prior year period due to the combined impact of lower home closing volume and a 2.3% decrease in ASP on closings. The decline in ASP on closings is a result of highercommunity utilizationmix ofwithin incentives.the region, with newer communities opening at lower ASPs. Home order volume decreased 3.6%3.0% to 1,3161,259 homes in the three months ended MarchJune 31,30, 2026 due to a 24.5% decline in orders pace to 4.04.1 net homes per month, partially offset by a 27.3%23.4% increase in average active community count. The decrease in orders volume combined with a 3.0%4.6% decrease inlower ASP on orders led to 6.5% lower home order value of $457.3$439.9 million in the three months ended MarchJune 31,30, 2026.2026, 7.4% lower than the prior year period. The Central Region cancellation rate of 12%14% in the three months ended MarchJune 31,30, 2026 was up from 9%11% in the prior year period but continues to be lower than the historical company average. The Central Region ended the first quarter of 2026 with 665 units in backlog, relatively consistent with prior year, while backlog value of $238.4 million was down 1.9% from March 31, 2025 due to a 2.7% lower ASP on backlog.period.

Land Closing Revenue and Gross Profit/(Loss)/Profit (in thousands)

Companywide. Home closing gross profit for the three months ended MarchJune 31,30, 2026 was $193.8$253.6 million, with a home closing gross margin of 17.5%18.3% down 450280 basis points from 22.0%21.1% in the three months ended MarchJune 31,30, 2025. For the six months ended June 30, 2026, home closing gross profit was $447.4 million, or 17.9%, down 360 basis points from 21.5% in the six months ended June 30, 2025. The margin decline for both the three and six months ended June 30, 2026 was due to the combined impact of increasedlower utilization of incentives,ASPs, reduced leverage of fixed costs on lower home closing revenue and higher lot costs, all of which were only partially offset by savings in direct costs,costs and shorter construction cycle times and lower compensation expense.times. Additionally, home closing gross margin was negatively impacted by real estate-related impairments and charges related to terminated land contracts. Excluding these charges, adjusted home closing gross margin was 17.8%18.6% and 21.4% for the three months ended MarchJune 31,30, 2026,2026 comparedand to2025, 22.1%respectively, and was 18.2% and 21.7% for the threesix months ended MarchJune 31,30, 2025.2026 and 2025, respectively.

Central. The Central Region Homehome closing gross margin of 18.2%19.1% for the three months ended MarchJune 31,30, 2026 decreased 380310 basis points from 22.0%22.2% in the prior year period due to increased lot costs and reduced fixed cost leverage due toon lower home closing revenue.ASPs and home closing revenue, partially offset by savings in direct costs. Real estate-related impairments and charges for terminated contracts also hadnegatively a negative impact onimpacted home closing gross margin for boththe firstthree quartermonths periods.ended June 30, 2026 by 50 basis points. Excluding these charges, adjusted home closing gross margin was 18.7%19.6% and 22.1%22.2% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. For the six months ended June 30, 2026, the Central Region home closing gross margin of 18.7% declined 340 basis points for the same reasons as the second quarter of 2026. Excluding real estate-related impairments and contract termination charges for the six months ended June 30, 2026 and 2025, adjusted home closing gross margin was 19.2% and 22.2%, respectively.

East. The East Region Homehome closing gross margin was 16.1%16.6% and 22.2%20.5% for the three months ended MarchJune 31,30, 2026 and 2025, respectively,respectively. aFor 610the six months ended June 30, 2026, the East Region home closing gross margin of 16.4% decreased 490 basis pointpoints decrease.from 21.3% in the same period of 2025. The margin decline in both the three and six month periods was due to reducedthe leverageincreased use of fixedincentives, costslost leverage on lower home closing revenue and higher lot costs, which more than offset the savings in direct costs. The Eastimpact Region home closing gross was also impacted byof real estate-related impairments and charges incurred related to terminated land contracts.contracts Whenalso excludinghad a negative impact on East Region home closing gross margin. Excluding these items, adjusted home closing gross margin was 16.6%16.9% and 22.3%21.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. For the six months ended June 30, 2026 and 2025, adjusted home closing gross margin was 16.8% and 21.6%, respectively.

Financial services profit represents the net profit of our financial services operations, including the operating profit generated by our wholly-owned title and insurance companies, Carefree Title and Meritage Insurance, respectively, as well as our portion of earnings from aour mortgage joint venture.ventures. FinancialResults from financial services profitare wasclosely fairlytied consistentto yearthe overnumber year.of home closings in each of our markets where we have financial services operations.

Commissions and Other Sales Costs. Commissions and other sales costs are comprised of internal and external commissions and related sales and marketing expenses such as advertising and sales office and completed spec home inventory costs. TheseFor the three months ended June 30, 2026, these costs decreased $15.2$17.0 million, to $79.5$91.8 million, and as a percentage of home closing revenue wereimproved relativelyslightly flatto at 7.2%6.6% in the three months ended MarchJune 31,30, 2026, compared to 7.1%6.7% in the prior year period. The lower spend for the three months ended June 30, 2026 was the result of lower commissions paid on lower home closing revenue and lower maintenance and utility costs associated with having less spec homes in inventory. For the six months ended June 30, 2026, these costs decreased $32.3 million, to $171.3 million, and were flat as a percentage of home closing revenue of 6.9% in the current and prior year period. The lower dollar spend for the six months ending June 30, 2026 is tied directly to lower commissions due to reduced home closing revenue.

General and Administrative Expenses. General and administrative expenses represent corporate and divisional overhead expenses such as salaries and bonuses, occupancy, insurance and travel expenses. For the three months ended MarchJune 31,30, 2026, general and administrative expenses of $51.4$52.4 million decreased $5.6$2.8 million from $57.0$55.2 million in the prior year period, primarilyperiod due to lower compensation expense and intentional reductions in discretionary spend,spend. whichFor the six months ended June 30, 2026, general and administrative expenses of $103.8 million decreased $8.4 million from the prior year period, for the same reasons as the second quarter of 2026, but were also partially offset by increased spend on technology. General and administrative expenses as a percentage of home closing revenue increasedwere 3.8% and 4.2% for the three and six months ended June 30, 2026. The 40 basis points toincrease 4.6%over for the three months ended March 31, 2026, up from 4.2% in theboth prior year periodperiods was due to reduced leverage of fixed costs on lower home closing revenue.

Interest Expense. Interest expense is comprised of interest incurred, but not capitalized, on our senior and convertible senior notes,notes and loans payable and other borrowings, including our Credit Facility. We recognized $0.6interest expense of $2.2 million interestand expense$2.8 million for the three and six months ended MarchJune 31,30, 2026, andrespectively. There was no interest expense in the same periodperiods of 2025 as all interest incurred was capitalized to qualifying assets.

Other Income, Net. Other income, net, primarily consists of (i) sublease income, (ii) interest earned on our cash and cash equivalents, (iii) payments and awards related to legal settlements and (iv) our portion of pre-tax income or loss from non-financial services joint ventures. Other income, net was $7.0$7.5 million and $9.5$10.9 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.respectively, and decreased due to less interest income on lower cash balances. Other income, net was $14.4 million and $20.4 million for the six months ended June 30, 2026 and 2025, respectively, and decreased due to less interest income on lower cash balances as well as a favorable legal settlement recognized in the prior year period.

At MarchJune 31,30, 2026, we had $766.6$807.3 million of cash and cash equivalents and $829.0$896.9 million available under the Credit Facility, thereby providing approximately $1.6$1.7 billion of total available capacity.

We are a party to many contractual obligations involving commitments to make payments to third parties. These obligations impact both short-term and long-term liquidity and capital resource needs. Certain contractual obligations are reflected on our unaudited consolidated balance sheets as of MarchJune 31,30, 2026, while others are considered future commitments for materials or services not yet provided. Our contractual obligations primarily consist of principal and interest payments on our senior and convertible senior notes, loans payable and other borrowings, including our Credit Facility, letters of credit and surety bonds and operating leases. We have no material debt maturities until 2027. We also have requirements for certain short-term lease commitments, funding working capital needs of our existing unconsolidated joint ventures and other purchase obligations in the normal course of business. Other material cash requirements include land acquisition and development costs, home construction costs and operating expenses, including our selling, general and administrative expenses, as previously discussed. We plan to fund these commitments primarily with cash flows generated by operations, but may also utilize additional debt or equity financing and borrowing capacity under our Credit Facility. Our maximum exposure to loss on our purchase and option agreements is generally limited to non-refundable deposits and capitalized or committed pre-acquisition costs.

We do not engage in commodity trading or other similar activities. We had no derivative financial instruments that required derivative accounting under ASC 815-10, Derivatives and Hedging, at MarchJune 31,30, 2026 or December 31, 2025.

During the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities totaled $101.3$290.8 million, and for the threesix months ended MarchJune 31,30, 2025, net cash used in operating activities totaled $42.6$28.9 million. Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026 consisted largely of cash generated from net earnings of $55.3$145.9 million,million and a $34.0$132.3 million decrease in real estate, and a $29.0 million decrease in other receivables, prepaids and other assets.estate. Cash flows used in operations in the threesix months ended MarchJune 31,30, 2025 reflected cash generated by net earnings of $122.8$269.7 million, which was offset by increasesa $224.6 million increase in real estate and deposits on real estate under option or contract of $60.8 million and $62.2 million, respectively.estate.

During the threesix months ended MarchJune 31,30, 2026 and 2025, net cash used in investing activities totaled $7.7$25.3 million and $11.4$21.6 million, respectively. Cash used in investing activities in both periods was mainly attributable to investments in unconsolidated entities and purchases of property and equipment and investments in unconsolidated entities.equipment.

During the threesix months ended MarchJune 31,30, 2026, net cash used by financing activities totaled $102.1$233.4 million, consisting of $130.0$230.0 million of share repurchases and $32.0$63.3 million of dividends paid, offset by $59.9 million in proceeds from liabilities related to consolidated real estate not owned. During the threesix months ended MarchJune 31,30, 2025, net cash provided by financing activities of $414.1$329.4 million primarily reflects the net proceeds of $492.1 million from the issuance of our 5.650% Senior Notes due 2035, offset by $45.0$90.0 million of share repurchases and $30.9$61.5 million of dividends paid. See 'Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds' for more information about our authorized share repurchase program.

During the three months ended MarchJune 31,30, 2026 and 2025, our Board of Directors approved, and we paid, a quarterly cash dividend on common stock of $0.48 and $0.43 per share, respectively. Quarterly dividends paid during the six months ended June 30, 2026 and 2025, totaled $0.96 and $0.86 per share, respectively.

Borrowings under the Credit Facility are unsecured, but availability is subject to, among other things, a borrowing base. The Credit Facility also contains certain financial covenants, including (a) a minimum tangible net worth requirement of $3.3$3.5 billion (which amount is subject to increase over time based on subsequent earnings and proceeds from equity offerings), and (b) a maximum leverage covenant that prohibits the leverage ratio (as defined therein) from exceeding 60%. We were in compliance with all Credit Facility covenants as of MarchJune 31,30, 2026. Our actual financial covenant calculations as of MarchJune 31,30, 2026 are reflected in the table below.

Historically, we have experienced seasonal variations in our quarterly operating results and capital requirements. We typically take orders for more homes in the first half of the year than in the second half, which has created additional working capital requirements in the first and second quarters to build our inventories to satisfy seasonally higher demand associated with our 60-day closing ready commitment homes.commitment. While we expect the seasonal orders pattern to continue over the long term, a higher backlog conversion rate and our all-spec strategy may shift the timing of home closings and capital requirements to build our inventories to earlier in the year. Additionally, seasonality may, from time to time, be affected by short-term volatility in the homebuilding industry and in the overall economy.