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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number: 1-12378
NVR, Inc.
(Exact name of registrant as specified in its charter)
Virginia54-1394360
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
11700 Plaza America Drive, Suite 500
Reston, Virginia 20190
(703) 956-4000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Not Applicable
(Former name, former address, and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareNVRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filer
Non-accelerated filer Smaller reporting company
    Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of July 31, 2024 there were 3,077,593 shares of common stock outstanding.



NVR, Inc.
FORM 10-Q
TABLE OF CONTENTS
Page
PART I
Item 1.
Item 2.
PART II
Item 1A.
Item 2.
Item 5.
Item 6.




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NVR, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
 June 30, 2024December 31, 2023
ASSETS  
Homebuilding:  
Cash and cash equivalents$2,438,473 $3,126,472 
Restricted cash46,218 41,483 
Receivables35,491 29,000 
Inventory:
Lots and housing units, covered under sales agreements with customers1,927,451 1,674,686 
Unsold lots and housing units229,319 214,666 
Land under development61,512 36,895 
Building materials and other26,137 23,903 
 2,244,419 1,950,150 
Contract land deposits, net646,341 576,551 
Property, plant and equipment, net79,057 63,716 
Operating lease right-of-use assets73,345 70,384 
Reorganization value in excess of amounts allocable to identifiable assets, net41,580 41,580 
Other assets258,172 242,751 
 5,863,096 6,142,087 
Mortgage Banking:  
Cash and cash equivalents31,123 36,422 
Restricted cash13,132 11,067 
Mortgage loans held for sale, net392,943 222,560 
Property and equipment, net7,069 6,348 
Operating lease right-of-use assets20,758 23,541 
Reorganization value in excess of amounts allocable to identifiable assets, net7,347 7,347 
Other assets71,820 152,385 
 544,192 459,670 
Total assets$6,407,288 $6,601,757 


See notes to condensed consolidated financial statements.
1


NVR, Inc.
Condensed Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)
(unaudited)
June 30, 2024December 31, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY  
Homebuilding:  
Accounts payable$421,457 $347,738 
Accrued expenses and other liabilities405,338 413,043 
Customer deposits369,274 334,441 
Operating lease liabilities78,563 75,797 
Senior notes912,078 913,027 
 2,186,710 2,084,046 
Mortgage Banking:  
Accounts payable and other liabilities63,960 127,511 
Operating lease liabilities22,710 25,475 
 86,670 152,986 
Total liabilities2,273,380 2,237,032 
Commitments and contingencies
Shareholders' equity:  
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of both June 30, 2024 and December 31, 2023
206 206 
Additional paid-in capital2,935,053 2,848,528 
Deferred compensation trust – 106,697 shares of NVR, Inc. common stock as of both June 30, 2024 and December 31, 2023
(16,710)(16,710)
Deferred compensation liability16,710 16,710 
Retained earnings14,160,198 13,365,025 
Less treasury stock at cost – 17,465,064 and 17,360,454 shares as of June 30, 2024 and December 31, 2023, respectively
(12,961,549)(11,849,034)
Total shareholders' equity4,133,908 4,364,725 
Total liabilities and shareholders' equity$6,407,288 $6,601,757 


See notes to condensed consolidated financial statements.
2

Table of Contents
NVR, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Homebuilding:    
Revenues$2,547,891 $2,283,769 $4,834,068 $4,415,102 
Other income36,184 34,259 77,050 67,205 
Cost of sales(1,947,616)(1,728,146)(3,673,829)(3,336,056)
Selling, general and administrative(141,213)(148,543)(293,716)(292,161)
Operating income495,246 441,339 943,573 854,090 
Interest expense(6,710)(6,628)(13,359)(13,629)
Homebuilding income488,536 434,711 930,214 840,461 
Mortgage Banking:    
Mortgage banking fees64,566 54,561 111,852 101,505 
Interest income4,672 3,823 8,764 6,841 
Other income1,333 1,102 2,504 2,091 
General and administrative(25,351)(22,854)(48,709)(45,488)
Interest expense(188)(167)(365)(424)
Mortgage banking income45,032 36,465 74,046 64,525 
Income before taxes533,568 471,176 1,004,260 904,986 
Income tax expense(132,664)(67,149)(209,087)(156,607)
Net income$400,904 $404,027 $795,173 $748,379 
Basic earnings per share$128.21 $123.84 $251.94 $230.20 
Diluted earnings per share$120.69 $116.54 $237.05 $216.52 
Basic weighted average shares outstanding3,127 3,263 3,156 3,251 
Diluted weighted average shares outstanding3,322 3,467 3,355 3,456 


See notes to condensed consolidated financial statements.
3

Table of Contents
NVR, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Six Months Ended June 30,
 20242023
Cash flows from operating activities:  
Net income$795,173 $748,379 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization8,737 8,405 
Equity-based compensation expense35,242 47,436 
Contract land deposit recoveries, net(8,791)(9,999)
Gain on sale of loans, net(91,861)(81,131)
Mortgage loans closed(2,910,238)(2,620,507)
Mortgage loans sold and principal payments on mortgage loans held for sale2,834,526 2,542,359 
Distribution of earnings from unconsolidated joint ventures1,500 2,000 
Net change in assets and liabilities:  
Increase in inventory(294,269)(231,814)
Increase in contract land deposits(60,999)(10,630)
Decrease in receivables49,473 4,183 
Decrease in accounts payable and accrued expenses(5,072)(89,815)
Increase in customer deposits34,833 54,959 
Other, net(9,104)(19,621)
Net cash provided by operating activities379,150 344,204 
Cash flows from investing activities:  
Investments in and advances to unconsolidated joint ventures(899)(1,224)
Distribution of capital from unconsolidated joint ventures2,715 180 
Purchase of property, plant and equipment(15,411)(11,448)
Proceeds from the sale of property, plant and equipment2,450 2,039 
Net cash used in investing activities(11,145)(10,453)
Cash flows from financing activities:  
Purchase of treasury stock(1,135,912)(311,125)
Principal payments on finance lease liabilities(1,055)(811)
Proceeds from the exercise of stock options82,464 161,724 
Net cash used in financing activities(1,054,503)(150,212)
Net (decrease) increase in cash, restricted cash, and cash equivalents(686,498)183,539 
Cash, restricted cash, and cash equivalents, beginning of the period3,215,444 2,574,518 
Cash, restricted cash, and cash equivalents, end of the period$2,528,946 $2,758,057 
Supplemental disclosures of cash flow information:  
Interest paid during the period, net of interest capitalized$14,424 $14,781 
Income taxes paid during the period, net of refunds$164,007 $262,608 


See notes to condensed consolidated financial statements.
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)

1. Significant Accounting Policies

Basis of Presentation
The accompanying unaudited, condensed consolidated financial statements include the accounts of NVR, Inc. (“NVR”, the “Company”, "we", "us" or "our") and its subsidiaries and certain other entities in which the Company is deemed to be the primary beneficiary (see Notes 2 and 3 to the accompanying condensed consolidated financial statements).  Intercompany accounts and transactions have been eliminated in consolidation. The statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Because the accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP, they should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. In the opinion of management, all adjustments (consisting only of normal recurring accruals except as otherwise noted herein) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
For the three and six months ended June 30, 2024 and 2023, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements.
Revenue Recognition
Homebuilding revenue is recognized on the settlement date at the contract sales price, when control is transferred to our customers. Our contract liabilities, which consist of deposits received from customers on homes not settled, were $369,274 and $334,441 as of June 30, 2024 and December 31, 2023, respectively. We expect that substantially all of the customer deposits held as of December 31, 2023 will be recognized in revenue in 2024. Our contract assets consist of prepaid sales compensation and totaled approximately $25,300 and $17,900 as of June 30, 2024 and December 31, 2023, respectively. Prepaid sales compensation is included in homebuilding “Other assets” on the accompanying condensed consolidated balance sheets.
Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, "Income Taxes - Improvements to Income Tax Disclosures." The amendments in the ASU require disclosure of specific categories in the rate reconciliation and for the entity to provide additional information for reconciling items that meet a quantitative threshold. The ASU will be effective for our fiscal year ending December 31, 2025. The amendments in the ASU are to be applied on a prospective basis and early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2023-09 and do not expect it to have a material impact on our consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting - Improvements to Reportable Segment Disclosures." The amendments in the ASU are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The amendments also expand interim segment disclosure requirements. The ASU will be effective for our fiscal year ending December 31, 2024 and for interim periods starting in the first quarter of fiscal year 2025. The
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
amendments in this ASU are required to be applied on a retrospective basis and early adoption is permitted. We are currently evaluating the impact that the adoption of ASU 2023-07 will have on our consolidated financial statements and related disclosures.
2.    Variable Interest Entities ("VIEs")
Fixed Price Finished Lot Purchase Agreements (“LPAs”)
We generally do not engage in the land development business. Instead, we typically acquire finished building lots at market prices from various development entities under LPAs. The LPAs require deposits that may be forfeited if we fail to perform under the LPAs. The deposits required under the LPAs are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots.  
The deposit placed by us pursuant to the LPA is deemed to be a variable interest in the respective development entities. Those development entities are deemed to be VIEs. Therefore, the development entities with which we enter into LPAs, including the joint venture limited liability corporations discussed below, are evaluated for possible consolidation by us. We have concluded that we are not the primary beneficiary of the development entities with which we enter into LPAs, and therefore, we do not consolidate any of these VIEs.
As of June 30, 2024, we controlled approximately 142,300 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $673,900 and $10,400, respectively. Our sole legal obligation and economic loss for failure to perform under these LPAs is limited to the amount of the deposit pursuant to the liquidated damage provisions contained in the LPAs and, in very limited circumstances, specific performance obligations. For the three and six months ended June 30, 2024, we recorded a net expense reversal of approximately $1,300 and $8,800, respectively, related to previously impaired lot deposits based on current market conditions. For the three and six months ended June 30, 2023, we recorded a net expense reversal of approximately $6,900 and $10,000, respectively, related to previously impaired lot deposits. Our contract land deposit asset is shown net of a $44,607 and $53,397 impairment reserve as of June 30, 2024 and December 31, 2023, respectively.
In addition, we have certain properties under contract with land owners that are expected to yield approximately 30,400 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. These properties are controlled with cash deposits totaling approximately $17,000 as of June 30, 2024, of which approximately $4,300 is refundable if certain contractual conditions are not met. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.
Our total risk of loss related to contract land deposits is limited to the amount of the deposits pursuant to the liquidated damages provision of the LPAs. As of June 30, 2024 and December 31, 2023, our total risk of loss was as follows:
June 30, 2024December 31, 2023
Contract land deposits$690,948 $629,948 
Loss reserve on contract land deposits(44,607)(53,397)
Contract land deposits, net646,341 576,551 
Contingent obligations in the form of letters of credit10,430 7,769 
Total risk of loss$656,771 $584,320 

3.    Joint Ventures
On a limited basis, we obtain finished lots using joint venture limited liability corporations (“JVs”). The JVs are typically structured such that we are a non-controlling member and are at risk only for the amount we have invested, or have committed to invest, in addition to any deposits placed under LPAs with the joint venture. We are
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
not a borrower, guarantor or obligor on any debt of the JVs, as applicable. We enter into LPAs to purchase lots from these JVs, and as a result have a variable interest in these JVs. We determined that we are not the primary beneficiary in any of the JVs because we and the other JV partner either share power or the other JV partner has the controlling financial interest.
As of June 30, 2024, we had an aggregate investment totaling approximately $27,100 in four JVs that are expected to produce approximately 5,150 finished lots, of which approximately 4,800 lots were controlled by us and the remaining approximately 350 lots were either under contract with unrelated parties or not currently under contract. We had additional funding commitments totaling approximately $10,600 to one of the JVs as of June 30, 2024. As of December 31, 2023, our aggregate investment in JVs totaled approximately $29,200. Investments in JVs for the respective periods are reported in the homebuilding "Other assets" line item on the accompanying condensed consolidated balance sheets. None of the JVs had any indicators of impairment as of June 30, 2024.
We recognize income from the JVs as a reduction to the lot cost of the lots purchased from the respective JVs when the homes are settled, based on the expected total profitability and the total number of lots expected to be produced by the respective JVs.
We classify distributions received from unconsolidated JVs using the cumulative earnings approach. As a result, distributions received up to the amount of cumulative earnings recognized by us are reported as distributions of earnings and those in excess of that amount are reported as a distribution of capital. These distributions are classified within the accompanying condensed consolidated statements of cash flows as cash flows from operating activities and investing activities, respectively.
4.    Land Under Development
On a limited basis, we directly acquire raw land parcels already zoned for its intended use to develop into finished lots.  Land under development includes the land acquisition costs, direct improvement costs, capitalized interest, where applicable, and real estate taxes. During the first quarter of 2024, we purchased a raw land parcel for approximately $20,000, which is expected to produce approximately 850 lots.
As of June 30, 2024, we owned land with a carrying value of $61,512 that will be developed into approximately 2,600 finished lots. As of December 31, 2023, the carrying value of land under development was $36,895. None of the raw parcels had any indicators of impairment as of June 30, 2024.
5.    Capitalized Interest
We capitalize interest costs to land under development during the active development of finished lots. In addition, we capitalize interest costs on our JV investments while the investments are considered qualified assets pursuant to ASC Topic 835-20 - Interest. Capitalized interest is transferred to sold or unsold inventory as the development of finished lots is completed, then charged to cost of sales upon our settlement of homes and the respective lots. Interest incurred in excess of the interest capitalizable based on the level of qualified assets is expensed in the period incurred.
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
The following table reflects the changes in our capitalized interest during the three and six months ended June 30, 2024 and 2023:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Interest capitalized, beginning of period$182 $205 $151 $570 
Interest incurred6,962 6,822 13,841 13,826 
Interest charged to interest expense(6,898)(6,795)(13,724)(14,053)
Interest charged to cost of sales(40)(43)(62)(154)
Interest capitalized, end of period$206 $189 $206 $189 

6.    Earnings per Share
The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share ("EPS") for the three and six months ended June 30, 2024 and 2023:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Weighted average number of shares outstanding used to calculate basic EPS3,126,831 3,262,529 3,156,247 3,250,960 
Dilutive securities:
Stock options and restricted share units194,823 204,407 198,272 205,446 
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS3,321,654 3,466,936 3,354,519 3,456,406 
The following non-qualified stock options ("Options") and restricted stock units ("RSUs") issued under equity incentive plans were outstanding during the three and six months ended June 30, 2024 and 2023, but were not included in the computation of diluted EPS because the effect would have been anti-dilutive.
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Anti-dilutive securities4,864 14,610 4,894 175,338 

7.    Shareholders’ Equity
A summary of changes in shareholders’ equity for the three months ended June 30, 2024 is presented below:
 Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Deferred
Compensation
Trust
Deferred
Compensation
Liability
Total
Balance, March 31, 2024$206 $2,905,707 $13,759,294 $(12,320,826)$(16,710)$16,710 $4,344,381 
Net income— — 400,904 — — — 400,904 
Purchase of common stock for treasury— — — (644,920)— — (644,920)
Equity-based compensation— 18,101 — — — — 18,101 
Proceeds from Options exercised— 15,442 — — — — 15,442 
Treasury stock issued upon Option exercise — (4,197)— 4,197 — — — 
Balance, June 30, 2024$206 $2,935,053 $14,160,198 $(12,961,549)$(16,710)$16,710 $4,133,908 
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
A summary of changes in shareholders’ equity for the six months ended June 30, 2024 is presented below:
 Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Deferred
Compensation
Trust
Deferred
Compensation
Liability
Total
Balance, December 31, 2023$206 $2,848,528 $13,365,025 $(11,849,034)$(16,710)$16,710 $4,364,725 
Net income— — 795,173 — — — 795,173 
Purchase of common stock for treasury— — — (1,143,696)— — (1,143,696)
Equity-based compensation— 35,242 — — — — 35,242 
Proceeds from Options exercised— 82,464 — — — — 82,464 
Treasury stock issued upon Option exercise and RSU vesting— (31,181)— 31,181 — — — 
Balance, June 30, 2024$206 $2,935,053 $14,160,198 $(12,961,549)$(16,710)$16,710 $4,133,908 

We repurchased 83,168 and 150,026 shares of our outstanding common stock during the three and six months ended June 30, 2024, respectively. We settle Option exercises and vesting of RSUs by issuing shares of treasury stock. We issued 5,809 and 44,786 shares from the treasury account during the three and six months ended June 30, 2024, respectively, in settlement of Option exercises and vesting of RSUs. Shares are relieved from the treasury account based on the weighted average cost basis of treasury shares.
A summary of changes in shareholders’ equity for the three months ended June 30, 2023 is presented below:
 Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Deferred
Compensation
Trust
Deferred
Compensation
Liability
Total
Balance, March 31, 2023$206 $2,676,641 $12,117,766 $(10,949,267)$(16,710)$16,710 $3,845,346 
Net income— — 404,027 — — — 404,027 
Purchase of common stock for treasury— — — (201,077)— — (201,077)
Equity-based compensation— 25,159 — — — — 25,159 
Proceeds from Options exercised— 79,808 — — — — 79,808 
Treasury stock issued upon Option exercise — (33,921)— 33,921 — — — 
Balance, June 30, 2023$206 $2,747,687 $12,521,793 $(11,116,423)$(16,710)$16,710 $4,153,263 
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
A summary of changes in shareholders’ equity for the six months ended June 30, 2023 is presented below:
 Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Deferred
Compensation
Trust
Deferred
Compensation
Liability
Total
Balance, December 31, 2022$206 $2,600,014 $11,773,414 $(10,866,785)$(16,710)$16,710 $3,506,849 
Net income— — 748,379 — — — 748,379 
Purchase of common stock for treasury— — — (311,125)— — (311,125)
Equity-based compensation— 47,436 — — — — 47,436 
Proceeds from Options exercised— 161,724 — — — — 161,724 
Treasury stock issued upon Option exercise — (61,487)— 61,487 — — — 
Balance, June 30, 2023$206 $2,747,687 $12,521,793 $(11,116,423)$(16,710)$16,710 $4,153,263 

We repurchased 34,827 and 56,001 shares of our outstanding common stock during the three and six months ended June 30, 2023, respectively. We issued 53,615 and 97,556 shares from the treasury account during the three and six months ended June 30, 2023, respectively, in settlement of Option exercises.  
8.    Product Warranties
We establish warranty and product liability reserves (“Warranty Reserve”) to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to our homebuilding business. Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the estimated current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with our general counsel and outside counsel retained to handle specific product liability cases.
The following table reflects the changes in our Warranty Reserve during the three and six months ended June 30, 2024 and 2023:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Warranty reserve, beginning of period$143,129 $144,431 $146,283 $144,006 
Provision23,273 22,312 42,221 43,582 
Payments(23,061)(24,323)(45,163)(45,168)
Warranty reserve, end of period$143,341 $142,420 $143,341 $142,420 

9.    Segment Disclosures
We disclose four homebuilding reportable segments that aggregate geographically our homebuilding operating segments, and we present our mortgage banking operations as one reportable segment. The homebuilding
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
reportable segments are comprised of operating divisions in the following geographic areas:
Mid Atlantic: Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East: New Jersey and Eastern Pennsylvania
Mid East: New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East: North Carolina, South Carolina, Tennessee, Florida, Georgia and Kentucky
Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses and a corporate capital allocation charge. The corporate capital allocation charge is eliminated in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering our cost of capital.  
Assets not allocated to the operating segments are not included in either the operating segment’s corporate capital allocation charge or the CODM’s evaluation of the operating segment’s performance. We record charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs. Mortgage banking operations are not charged a corporate capital allocation charge.
In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. Our overhead functions such as accounting, treasury and human resources are centrally performed and these costs are not allocated to our operating segments. Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to our operating segments. External corporate interest expense primarily consists of interest charges on our 3.00% Senior Notes due 2030 (the “Senior Notes”), which are not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.
The following tables present segment revenues, profit and assets with reconciliations to the amounts reported for the consolidated enterprise, where applicable:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Revenues:
Homebuilding Mid Atlantic$1,133,685 $1,058,794 $2,151,155 $1,999,942 
Homebuilding North East287,334 232,926 543,004 416,356 
Homebuilding Mid East433,996 411,682 850,947 814,079 
Homebuilding South East692,876 580,367 1,288,962 1,184,725 
Mortgage Banking64,566 54,561 111,852 101,505 
Total consolidated revenues$2,612,457 $2,338,330 $4,945,920 $4,516,607 

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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Income before taxes:
Homebuilding Mid Atlantic$209,166 $195,254 $399,130 $354,292 
Homebuilding North East54,372 44,932 101,229 76,992 
Homebuilding Mid East63,588 61,756 129,989 118,224 
Homebuilding South East94,442 106,648 185,847 232,058 
Mortgage Banking46,234 37,843 75,890 67,270 
Total segment profit before taxes467,802 446,433 892,085 848,836 
Reconciling items:
Contract land deposit reserve adjustment (1)1,325 6,888 8,791 10,479 
Equity-based compensation expense (2)(18,101)(25,159)(35,242)(47,436)
Corporate capital allocation (3)82,494 72,617 159,555 141,691 
Unallocated corporate overhead(33,816)(46,360)(85,520)(92,325)
Consolidation adjustments and other 6,363 (9,998)4,092 (5,999)
Corporate interest expense(6,670)(6,589)(13,265)(13,543)
Corporate interest income34,171 33,344 73,764 63,283 
Reconciling items sub-total65,766 24,743 112,175 56,150 
Consolidated income before taxes$533,568 $471,176 $1,004,260 $904,986 
(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of lot deposit impairment charges in Note 2.
(2)The decrease in equity-based compensation expense for the three and six-month periods ended June 30, 2024 was primarily attributable to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.
(3)This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Corporate capital allocation charge:
Homebuilding Mid Atlantic$34,978 $35,337 $68,897 $68,516 
Homebuilding North East10,298 8,272 19,878 15,597 
Homebuilding Mid East11,055 9,819 20,920 19,479 
Homebuilding South East26,163 19,189 49,860 38,099 
Total$82,494 $72,617 $159,555 $141,691 


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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
 June 30, 2024December 31, 2023
Assets:
Homebuilding Mid Atlantic$1,349,090 $1,252,360 
Homebuilding North East375,447 314,904 
Homebuilding Mid East433,214 368,154 
Homebuilding South East944,560 796,505 
Mortgage Banking536,845 452,323 
Total segment assets3,639,156 3,184,246 
Reconciling items:
Cash and cash equivalents2,438,473 3,126,472 
Deferred taxes152,359 148,005 
Intangible assets and goodwill49,368 49,368 
Operating lease right-of-use assets73,345 70,384 
Finance lease right-of-use assets29,838 13,310 
Contract land deposit reserve(44,607)(53,397)
Consolidation adjustments and other69,356 63,369 
Reconciling items sub-total2,768,132 3,417,511 
Consolidated assets$6,407,288 $6,601,757 

10.    Fair Value
GAAP assigns a fair value hierarchy to the inputs used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs.
Financial Instruments
The estimated fair values of our Senior Notes as of June 30, 2024 and December 31, 2023 were $795,816 and $803,646, respectively. The estimated fair value is based on recent market prices of similar transactions, which is classified as Level 2 within the fair value hierarchy. The carrying values as of June 30, 2024 and December 31, 2023 were $912,078 and $913,027, respectively.
Due to the short term nature of our cash equivalents, we believe that insignificant differences exist between their carrying value and fair value.
Derivative Instruments and Mortgage Loans Held for Sale
In the normal course of business, our wholly-owned mortgage subsidiary, NVR Mortgage Finance, Inc. (“NVRM”), enters into contractual commitments to extend credit to our homebuyers with fixed expiration dates. The commitments become effective when the borrowers "lock-in" a specified interest rate within time frames established by NVRM. All mortgagors are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the "lock-in" of rates by the borrower and the sale date of the loan to an investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to investors. The forward sales contracts lock-in a range of interest rates and prices for the sale of loans similar to the specific rate lock commitments. NVRM does not engage in speculative derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to investors are undesignated derivatives and, accordingly, are marked to fair value through earnings. As of June 30, 2024, there were contractual commitments to extend credit to borrowers aggregating $2,485,351 and
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
open forward delivery contracts aggregating $2,476,295, which hedge both the rate lock commitments and closed loans held for sale.
The fair value of NVRM’s rate lock commitments to borrowers and the related input levels include, as applicable:
i)the assumed gain/loss of the expected resultant loan sale (Level 2);
ii)the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and
iii)the value of the servicing rights associated with the loan (Level 2).
The assumed gain/loss considers the excess servicing to be received or buydown fees to be paid upon securitization of the loan. The excess servicing and buydown fees are calculated pursuant to contractual terms with investors. To calculate the effects of interest rate movements, NVRM utilizes applicable published mortgage-backed security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount. NVRM sells almost all of its loans on a servicing released basis, and receives a servicing released premium upon sale. Thus, the value of the servicing rights is included in the fair value measurement and is based upon contractual terms with investors and varies depending on the loan type. NVRM assumes a fallout rate when measuring the fair value of rate lock commitments. Fallout is defined as locked loan commitments for which NVRM does not close a mortgage loan and is based on historical experience.
The fair value of NVRM’s forward sales contracts to investors solely considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.
Mortgage loans held for sale are recorded at fair value when closed, and thereafter are carried at the lower of cost or fair value, net of deferred origination costs, until sold. Fair value is measured using Level 2 inputs. As of June 30, 2024, the fair value of loans held for sale of $392,943 included on the accompanying condensed consolidated balance sheet was increased by $6,367 from the aggregate principal balance of $386,576. As of December 31, 2023, the fair value of loans held for sale of $222,560 was increased by $6,349 from the aggregate principal balance of $216,211.
The fair value measurement of NVRM's undesignated derivative instruments was as follows:
June 30, 2024December 31, 2023
Rate lock commitments:
Gross assets$45,257 $61,150 
Gross liabilities7,934 168 
Net rate lock commitments$37,323 $60,982 
Forward sales contracts:
Gross assets$5,676 $8 
Gross liabilities3,834 18,305 
Net forward sales contracts$1,842 $(18,297)
As of June 30, 2024, the net rate lock commitments and the net forward sales contracts are reported in mortgage banking "Other assets," on the accompanying condensed consolidated balance sheets. As of December 31,
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
2023, the net rate lock commitments are reported in mortgage banking "Other assets" and the net forward sales contracts are reported in mortgage banking "Accounts payable and other liabilities".
The fair value measurement as of June 30, 2024 was as follows:
Notional or
Principal
Amount
Assumed
Gain
From Loan
Sale
Interest
Rate
Movement
Effect
Servicing
Rights
Value
Security
Price
Change
Total Fair
Value
Measurement
Rate lock commitments$2,485,351 $10,553 $(3,686)$30,456 $— $37,323 
Forward sales contracts$2,476,295 — — — 1,842 1,842 
Mortgages held for sale$386,576 2,020 (937)5,284 — 6,367 
Total fair value measurement$12,573 $(4,623)$35,740 $1,842 $45,532 

The total fair value measurement as of December 31, 2023 was a net gain of $49,034. NVRM recorded a fair value adjustment to income of $668 for the three months ended June 30, 2024, and recorded a fair value adjustment to expense of $3,502 for the six months ended June 30, 2024. NVRM recorded a fair value adjustment to income of $301 and $42,489 for the three and six months ended June 30, 2023, respectively. Unrealized gains/losses from the change in the fair value measurements are included in earnings as a component of mortgage banking fees in the accompanying condensed consolidated statements of income. The fair value measurement will be impacted in the future by the change in the value of the servicing rights, interest rate movements, security price fluctuations, and the volume and product mix of NVRM’s closed loans and locked loan commitments.
11.    Debt
As of June 30, 2024, we had the following debt instruments outstanding:
Senior Notes
Our outstanding Senior Notes have an aggregate principal balance of $900,000, mature on May 15, 2030 and bear interest at 3.00%, payable semi-annually in arrears on May 15 and November 15. The Senior Notes are senior unsecured obligations and rank equally in right of payment with any of our existing and future unsecured senior indebtedness. The Senior Notes were issued in three separate issuances, $600,000 issued at a discount to yield 3.02%, and the two additional issuances totaling $300,000 issued at a premium to yield 2.00%. The Senior Notes have been reflected net of the unamortized discount or premium, as applicable, and the unamortized debt issuance costs in the accompanying condensed consolidated balance sheet.
The indenture governing the Senior Notes does not contain any financial covenants; however, it does contain, among other items, and subject to certain exceptions, covenants that restrict our ability to create, incur, assume or guarantee secured debt, enter into sale and leaseback transactions and conditions related to mergers and/or the sale of assets. We were in compliance with all covenants under the Senior Notes as of June 30, 2024.
Credit Agreement
We have an unsecured Credit Agreement (the “Credit Agreement”), which provides for aggregate revolving loan commitments of $300,000 (the “Facility”). Under the Credit Agreement, we may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit, of which approximately $16,100 was outstanding as of June 30, 2024. The Credit Agreement termination date is February 12, 2026. There were no borrowings outstanding under the Facility as of June 30, 2024.
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
Repurchase Agreement
NVRM provides for its mortgage origination and other operating activities using cash generated from its operations, borrowings from its parent company, NVR, as well as a revolving mortgage repurchase agreement (the “Repurchase Agreement”), which is non-recourse to NVR. The Repurchase Agreement provides for loan purchases up to $150,000, subject to certain sub-limits. Amounts outstanding under the Repurchase Agreement are collateralized by the Company’s mortgage loans held for sale.
Effective July 16, 2024, NVRM entered into the Second Amendment to Second Amended and Restated Master Repurchase Agreement with U.S. Bank National Association, as Agent and a Buyer (the "Amended MRA"), which extended the term of the Repurchase Agreement through July 14, 2025. All other terms and conditions under the Amended Repurchase Agreement remained materially consistent. As of June 30, 2024, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement and there were no borrowings outstanding.
12.    Commitments and Contingencies
We are involved in various litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on our financial position, results of operations or cash flows. Legal costs incurred in connection with outstanding litigation are expensed as incurred.
13.    Leases
We have operating leases for our corporate and division offices, production facilities, model homes, and certain office and production equipment. Additionally, we have finance leases for certain production equipment and facilities which are recorded in homebuilding "Property, plant and equipment, net" and "Accrued expenses and other liabilities" on the accompanying condensed consolidated balance sheets. Our finance lease Right-of-use ("ROU") assets and finance lease liabilities were $29,838 and $31,767, respectively, as of June 30, 2024, and $13,310 and $14,965, respectively, as of December 31, 2023. Our leases have remaining lease terms of up to 16.2 years, some of which include options to extend the lease for up to 20 years, and some of which include options to terminate the lease.
We recognize operating lease expense on a straight-line basis over the lease term. We have elected to use the portfolio approach for certain equipment leases which have similar lease terms and payment schedules. Additionally, for certain equipment we account for the lease and non-lease components as a single lease component. Our sublease income is de minimis.
We have certain leases, primarily the leases of model homes, which have initial lease terms of twelve months or less ("Short-term leases"). We elected to exclude these leases from the recognition requirements under Topic 842, and these leases have not been included in our recognized ROU assets and lease liabilities.
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
The components of lease expense were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Lease expense
Operating lease expense$9,514 $9,475 $18,861 $18,615 
Finance lease expense:
Amortization of ROU assets767 511 1,329 1,013 
Interest on lease liabilities239 105 352 211 
Short-term lease expense8,179 7,531 16,079 15,023 
Total lease expense$18,699 $17,622 $36,621 $34,862 
Other information related to leases was as follows:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Supplemental Cash Flows Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$7,802 $7,420 $15,313 $14,736 
Operating cash flows from finance leases239 105 352 211 
Financing cash flows from finance leases593 411 1,055 811 
ROU assets obtained in exchange for lease obligations:
Operating leases$12,101 $10,090 $13,491 $23,337 
Finance leases$16,011 $250 $17,857 $499 
June 30, 2024December 31, 2023
Weighted-average remaining lease term (in years):
Operating leases6.15.8
Finance leases10.79.9
Weighted-average discount rate:
Operating leases4.4 %4.2 %
Finance leases4.6 %3.1 %

14.    Income Taxes
Our effective tax rate for the three and six months ended June 30, 2024 was 24.9% and 20.8%, respectively, compared to 14.3% and 17.3% for the three and six months ended June 30, 2023, respectively. The increase in the effective tax rate in the three and six month periods of 2024 compared to the same periods in 2023 was primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which
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NVR, Inc.
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except per share data)
(unaudited)
totaled $6,815 and $50,608 for the three and six months ended June 30, 2024, respectively, and $55,906 and $79,151 for the three and six months ended June 30, 2023, respectively.
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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands, except per share data)
Forward-Looking Statements
Some of the statements in this Quarterly Report on Form 10-Q, as well as statements made by us in periodic press releases or other public communications, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other comparable terminology.  All statements other than of historical facts are forward-looking statements.  Forward-looking statements contained in this document may include those regarding market trends, our financial position and financial results, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or performance to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements.  Such risk factors include, but are not limited to the following: general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by us and our customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by us in our homebuilding operations; shortages of labor; the economic impact of a major epidemic or pandemic; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which we have little or no control.  We undertake no obligation to update such forward-looking statements except as required by law.  For additional information regarding risk factors, see Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Unless the context otherwise requires, references to “NVR,” “we,” “us,” or “our” include NVR and its consolidated subsidiaries.
Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023
Business Environment and Current Outlook
Consistent with the first quarter of 2024, demand for new homes remained solid in the second quarter of 2024 despite continued affordability issues driven by high mortgage interest rates and home prices. New home demand continues to be favorably impacted by a limited supply of homes in the resale market; however, we expect that affordability issues, inflationary pressures, interest rate volatility and economic uncertainty may weigh on future demand. We also expect to continue to face cost pressures related to building materials, labor and land costs which will impact profit margins based on our ability to manage these costs while balancing sales pace and home prices. Although we are unable to predict the extent to which this will impact our operational and financial performance, we believe that we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet and our disciplined lot acquisition strategy.
Business
Our primary business is the construction and sale of single-family detached homes, townhomes and condominiums, all of which are primarily constructed on a pre-sold basis. To fully serve customers of our homebuilding operations, we also operate a mortgage banking and title services business. We primarily conduct our operations in mature markets. Additionally, we generally grow our business through market share gains in our existing markets and by expanding into markets contiguous to our current active markets. Our four homebuilding reportable segments consist of the following regions:
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Mid Atlantic: Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East: New Jersey and Eastern Pennsylvania
Mid East: New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East: North Carolina, South Carolina, Tennessee, Florida, Georgia and Kentucky
Our lot acquisition strategy is predicated upon avoiding the financial requirements and risks associated with direct land ownership and development. We generally do not engage in land development (see discussion below of our land development activities). Instead, we typically acquire finished building lots from various third party land developers pursuant to fixed price finished lot purchase agreements (“LPAs”). These LPAs require deposits, typically ranging up to 10% of the aggregate purchase price of the finished lots, in the form of cash or letters of credit that may be forfeited if we fail to perform under the LPA. This strategy has allowed us to maximize inventory turnover, which we believe enables us to minimize market risk and to operate with less capital, thereby enhancing rates of return on equity and total capital.
In addition to constructing homes primarily on a pre-sold basis and utilizing what we believe is a conservative lot acquisition strategy, we focus on obtaining and maintaining a leading market position in each market we serve. This strategy allows us to gain valuable efficiencies and competitive advantages in our markets, which we believe contributes to minimizing the adverse effects of regional economic cycles and provides growth opportunities within these markets. Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build.
In certain specific strategic circumstances we engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development. Once we acquire control of raw ground, we determine whether to sell the raw parcel to a developer and enter into an LPA with the developer to purchase the finished lots or to hire a developer to develop the land on our behalf. While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so. We expect, however, to continue to acquire substantially all our finished lot inventory using LPAs with forfeitable deposits.
As of June 30, 2024, we controlled approximately 149,700 lots as described below.
Lot Purchase Agreements
We controlled approximately 142,300 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $673,900 and $10,400, respectively. Included in the number of controlled lots are approximately 9,700 lots for which we have recorded a contract land deposit impairment reserve of approximately $44,600 as of June 30, 2024.
Joint Venture Limited Liability Corporations (“JVs”)
We had an aggregate investment totaling approximately $27,100 in four JVs, expected to produce approximately 5,150 lots. Of the lots to be produced by the JVs, approximately 4,800 lots were controlled by us and approximately 350 were either under contract with unrelated parties or currently not under contract. We had additional funding commitments totaling approximately $10,600 to one of the JVs as of June 30, 2024.
Land Under Development
We owned land with a carrying value of approximately $61,500 that will be developed into approximately 2,600 finished lots.
See Notes 2, 3 and 4 to the condensed consolidated financial statements included herein for additional information regarding LPAs, JVs and land under development, respectively.
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Raw Land Purchase Agreements
In addition, we have certain properties under contract with land owners that are expected to yield approximately 30,400 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. As of June 30, 2024, these properties are controlled with deposits in cash totaling approximately $17,000, of which approximately $4,300 is refundable if certain contractual conditions are not met. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.
Key Financial Results
Our consolidated revenues for the second quarter of 2024 totaled $2,612,457, a 12% increase from the second quarter of 2023. Net income for the second quarter ended June 30, 2024 was $400,904, or $120.69 per diluted share. For the second quarter ended June 30, 2024, net income decreased 1% and diluted earnings per share increased 4% when compared to net income and diluted earnings per share for the second quarter of 2023, respectively. Our homebuilding gross profit margin percentage decreased to 23.6% in the second quarter of 2024 from 24.3% in the second quarter of 2023. New orders, net of cancellations (“New Orders”) increased by 3% in the second quarter of 2024 compared to the second quarter of 2023. The New Order cancellation rate for the second quarter of 2024 increased to 12.9% from 10.9% in the same period in 2023. The average sales price for New Orders in the second quarter of 2024 was $458.8, an increase of 3% compared to the second quarter of 2023.


Homebuilding Operations
The following table summarizes the results of operations and other data for our homebuilding operations:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Financial Data:
Revenues$2,547,891 $2,283,769 $4,834,068 $4,415,102 
Cost of sales$1,947,616 $1,728,146 $3,673,829 $3,336,056 
Gross profit margin percentage23.6 %24.3 %24.0 %24.4 %
Selling, general and administrative expenses$141,213 $148,543 $293,716 $292,161 
Operating Data:
New orders (units)6,067 5,905 12,116 11,793 
Average new order price$458.8 $447.3 $456.6 $444.3 
Settlements (units)5,659 5,085 10,748 9,724 
Average settlement price$450.2 $449.0 $449.7 $454.0 
Backlog (units)11,597 11,231 
Average backlog price$470.3 $458.6 
New order cancellation rate12.9 %10.9 %13.0 %12.4 %

Consolidated Homebuilding - Three Months Ended June 30, 2024 and 2023
Homebuilding revenues increased 12% in the second quarter of 2024 compared to the same period in 2023, primarily as a result of an 11% increase in the number of units settled. The increase in settlements was primarily attributable to a 7% higher backlog unit balance entering the second quarter of 2024 compared to the backlog unit balance entering the second quarter of 2023, coupled with a higher backlog turnover rate quarter over quarter. Gross profit margin percentage in the second quarter of 2024 decreased to 23.6%, from 24.3% in the second quarter of 2023. Gross profit margin was negatively impacted by higher lot and closing costs quarter over quarter.
New Orders and the average sales price of New Orders both increased 3% in the second quarter of 2024 compared to the second quarter of 2023. New Orders were favorably impacted by a 2% increase in the average
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number of active communities quarter over quarter, coupled with favorable market conditions which led to a higher sales absorption rate in the second quarter of 2024. The increase in the average sales price of New Orders is primarily attributable to a relative shift to higher priced communities in certain of our reporting segments as discussed in the respective segments below.
Selling, general and administrative (“SG&A”) expense in the second quarter of 2024 decreased by approximately $7,300 compared to the second quarter of 2023, and as a percentage of revenue decreased to 5.5% from 6.5% quarter over quarter. The decrease in SG&A expense was primarily attributable to a decrease of approximately $6,800 in equity-based compensation quarter over quarter due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.
Consolidated Homebuilding - Six Months Ended June 30, 2024 and 2023
Homebuilding revenues increased 9% in the first six months of 2024 compared to the same period in 2023, as a result of an 11% increase in the number of units settled, offset partially by a 1% decrease in the average settlement price year over year. The increase in settlements was attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Gross profit margin percentage in the first six months of 2024 decreased to 24.0% from 24.4% in the first six months of 2023. Gross profit margin was negatively impacted by higher lot and closing costs year over year.
New Orders and the average sales price of New Orders both increased 3% in the first six months of 2024 compared to the same period in 2023. New Orders were favorably impacted by a 2% increase in the average number of active communities year over year. The increase in the average sales price of New Orders is attributable to a relative shift to higher priced markets and communities in certain of our reporting segments as discussed in the respective segments below.
SG&A expense in the first six months of 2024 increased by approximately $1,600 compared to the same period in 2023, and as a percentage of revenue decreased to 6.1% in 2024 from 6.6% in 2023. The increase in SG&A expense was primarily attributable to a $7,200 increase in personnel costs attributable to an increase in headcount year over year. Additionally, sales and marketing expenses were approximately $4,000 higher year over year due to an increase in model home related expenses. These increases in SG&A expense were partially offset by an $11,100 decrease in equity-based compensation year over year due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.
Our backlog represents homes sold but not yet settled with our customers. As of June 30, 2024, our backlog increased on a unit basis by 3% to 11,597 units and on a dollar basis by 6% to $5,454,470 when compared to 11,231 units and $5,150,347, respectively, as of June 30, 2023. The increase in the number of backlog units was primarily attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Backlog dollars were higher primarily due to the increase in backlog units year over year, coupled with a 3% increase in the average sales price of New Orders for the six month period ended June 30, 2024 compared to the same period in 2023.
Our backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period. Calculated as the total of all cancellations during the period as a percentage of gross sales during that same period, our cancellation rate was approximately 13% and 12% in the first six months of 2024 and 2023, respectively.  During the most recent four quarters, approximately 4% of a reporting quarter’s opening backlog cancelled during the fiscal quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur during the remainder of 2024 or future years. Other than those units that are cancelled, we expect to settle substantially all of our June 30, 2024 backlog within the next twelve months.
The backlog turnover rate is impacted by various factors, including, but not limited to, changes in New Order activity, internal production capacity, external subcontractor capacity, building material supply chain disruptions and other external factors over which we do not exercise control.
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Reportable Segments
Homebuilding segment profit includes all revenues and income generated from the sale of homes, less the cost of homes sold, SG&A expenses, and a corporate capital allocation charge determined by corporate management. The corporate capital allocation charge eliminates in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker to determine whether the operating segment is providing the desired rate of return after covering our cost of capital.
We record charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. We evaluate our entire net contract land deposit portfolio for impairment each quarter. For presentation purposes below, the contract land deposit reserve as of June 30, 2024 and December 31, 2023 has been allocated to the respective year’s reportable segments to show contract land deposits on a net basis. The net contract land deposit balances below also include approximately $10,400 and $7,700 as of June 30, 2024 and December 31, 2023, respectively, of letters of credit issued as deposits in lieu of cash.
The following tables summarize certain homebuilding operating activity by reportable segment for the three and six months ended June 30, 2024 and 2023.
Selected Segment Financial Data:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Revenues:
Mid Atlantic$1,133,685 $1,058,794 $2,151,155 $1,999,942 
North East287,334 232,926 543,004 416,356 
Mid East433,996 411,682 850,947 814,079 
South East692,876 580,367 1,288,962 1,184,725 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Gross profit margin:
Mid Atlantic$280,337 $265,492 $541,966 $494,753 
North East76,240 63,439 143,578 112,528 
Mid East94,479 90,452 188,889 175,065 
South East153,870 152,011 299,706 319,473 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Gross profit margin percentage:
Mid Atlantic24.7 %25.1 %25.2 %24.7 %
North East26.5 %27.2 %26.4 %27.0 %
Mid East21.8 %22.0 %22.2 %21.5 %
South East22.2 %26.2 %23.3 %27.0 %
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 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
Segment profit:
Mid Atlantic$209,166 $195,254 $399,130 $354,292 
North East54,372 44,932 101,229 76,992 
Mid East63,588 61,756 129,989 118,224 
South East94,442 106,648 185,847 232,058 
Operating Activity:
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
 UnitsAverage
Price
UnitsAverage
Price
UnitsAverage
Price
UnitsAverage
Price
New orders, net of cancellations:       
Mid Atlantic2,297 $536.2 2,348 $519.2 4,579 $525.9 4,583 $517.8 
North East478 $623.4 463 $557.0 1,005 $617.7 905 $564.9 
Mid East1,262 $403.7 1,339 $390.3 2,525 $406.8 2,656 $387.3 
South East2,030 $366.7 1,755 $365.7 4,007 $368.3 3,649 $363.5 
Total6,067 $458.8 5,905 $447.3 12,116 $456.6 11,793 $444.3 
 Three Months Ended June 30,Six Months Ended June 30,
 2024202320242023
 UnitsAverage
Price
UnitsAverage
Price
UnitsAverage
Price
UnitsAverage
Price
Settlements:        
Mid Atlantic2,199 $515.5 2,030 $521.3 4,165 $516.5 3,825 $522.7 
North East487 $589.8 432 $539.2 950 $571.5 795 $523.7 
Mid East1,075 $403.7 1,067 $385.7 2,124 $400.6 2,056 $395.9 
South East1,898 $365.1 1,556 $373.0 3,509 $367.3 3,048 $388.7 
Total5,659 $450.2 5,085 $449.0 10,748 $449.7 9,724 $454.0 
 As of June 30,
 20242023
 UnitsAverage
Price
UnitsAverage
Price
Backlog:    
Mid Atlantic4,508 $531.4 4,450 $528.8 
North East1,083 $643.3 995 $587.9 
Mid East2,377 $416.6 2,453 $392.1 
South East3,629 $378.0 3,333 $375.1 
Total11,597 $470.3 11,231 $458.6 
 Three Months Ended June