What changed in this filing

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Item 1A. Risk Factors

2025-10-23 compared with 2025-07-24 · 17 added, 18 removed, 80 unchanged (30% of the section changed)

16 unchanged sentences

and other factors, including those described elsewhere in this report and our other SEC filings.

Declines in consumer confidence and spending, market fluctuations and the increased likelihood of recessionary conditions contributed to reduced demand for our homes in the first six months of 2025 compared to the prior year period, which adversely affected our results of operations for the first six months of 2025.

Declines in consumer confidence and spending, market fluctuations and the increased likelihood of recessionary conditions contributed to reduced demand for our homes in the first nine months of 2025 compared to the prior year period, which adversely affected our results of operations for the first nine months of 2025.

If there is limited economic growth, declines in employment and consumer income, changes in consumer behavior, and/or tightening of mortgage lending standards, practices and regulation in the geographic areas in which we operate, or if interest rates for mortgage loans or home prices rise, there could likely be additional corresponding adverse effects on our business, prospects, liquidity, financial condition and results of operations, including, but not limited to, the number of homes we sell, our average sales price per home closed, cancellations of home purchase contracts, and the amount of revenues or profits we generate, and such effect may be material.

3 unchanged sentences

and we may incur substantial losses from operations.

During the first six months of 2025, we incurred inventory impairment charges of $7.8 million.

During the first nine months of 2025, we incurred inventory impairment charges of $11.0 million.

At any particular time, we cannot accurately predict whether housing market conditions will improve, deteriorate or continue as they exist at that time.

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 real estate taxes and federal and state income tax provisions, including provisions for the deduction of mortgage interest payments;

and global financial system and credit markets, including short- and long-term interest rates and inflation, and any effects from a potential U.S.

government shutdown or sovereign default;

and global financial system and credit markets, including short- and long-term interest rates and inflation, and any effects from the current U.S.

government shutdown or any potential sovereign default;

 housing demand from population growth, household formations, new home buying catalysts (such as marriage and children), second home buying catalysts (such as retirement), home sale catalysts (such as an aging population), demographic changes (including immigration levels and trends in urban and suburban migration), generational shifts, or otherwise, or perceptions regarding the strength of the housing market, and home price appreciation and depreciation resulting therefrom;

2 unchanged sentences

These factors have resulted in the past and in the future could result in a decline in the demand for our homes, as well as a decline in the pricing for our homes, an increase in customer cancellations, an increase in selling concessions, and downward pressure on the market value of our inventory, which could have a material adverse effect on our business, prospects, liquidity, financial condition and results of operations and increase the risk for asset impairments.

In the first six months of 2025, uncertainty resulting in part from the announcement, imposition and/or repeal of tariffs on U.S.

In the first nine months of 2025, uncertainty resulting in part from the announcement, imposition and/or repeal of tariffs on U.S.

trade partners caused declines in consumer confidence and spending, market fluctuations and the increased likelihood of recessionary conditions.

This resulted in a decline in the demand for our homes during first six months of 2025 compared to the prior year period.

This resulted in a decline in the demand for our homes during first nine months of 2025 compared to the prior year period.

If these conditions persist, there may be a sustained downturn in the homebuilding market, which would likely have an adverse effect on our business and results of operations for multiple years.

11 unchanged sentences

Additionally, our business could be adversely affected by unstable economic and political conditions as well as geopolitical conflicts.

While we do not have any customer or direct supplier relationships in foreign countries experiencing war, military conflicts, sanctions, or export controls, other actions that may be initiated by nations (e.g., the recent imposition and repeal of tariffs, potential cyber attacks, disruption of energy flows, etc.) and other potential uncertainties could adversely affect our supply chain by causing shortages or increases in costs for materials necessary to construct homes, as described elsewhere in these risk factors, and/or increases to the price of gasoline and other fuels.

Although we do not have customers or direct suppliers in countries affected by war, conflict, sanctions, or export controls, actions by other nations—such as tariffs, cyberattacks, or energy disruptions—could still impact our supply chain.

These actions may lead to material shortages or increased costs for construction and fuel, as discussed elsewhere in these risk factors.

In addition, such events could cause higher interest rates, inflation or general economic and geopolitical uncertainty, including the recent economic uncertainty and volatility resulting from the imposition and repeal of tariffs, any of which could negatively impact our business partners, employees or customers, or otherwise adversely impact our business.

2 unchanged sentences

Any increase in unemployment or underemployment may lead to reduced demand for our homes and an increase in the number of loan delinquencies and property repossessions and have an adverse impact on our business and results of operations.

In the United States, the unemployment rate was 4.1% as of the end of June 2025, according to the U.S.

Bureau of Labor Statistics.

Recessionary conditions may cause this rate to increase.

Recessionary conditions may cause the unemployment rate in the United States to increase.

People who are not employed, are underemployed, or are concerned about the loss of their jobs are less likely to purchase new homes, may be forced to try to sell the homes they own, and may face difficulties in making required mortgage payments.

Therefore, an increase in unemployment or underemployment may lead to an increase in the number of loan delinquencies and property repossessions and have an adverse impact on our business by both reducing the demand for the homes we build and increasing the supply of homes for sale, which would also likely adversely affect our Financial Services business, which is dependent upon the sale of our homes.

Therefore, an increase in unemployment or underemployment may lead to an increase in the number of loan delinquencies and property repossessions and have an adverse impact

on our business by both reducing the demand for the homes we build and increasing the supply of homes for sale, which would also likely adversely affect our Financial Services business, which is dependent upon the sale of our homes.

In addition, an increase in unemployment or underemployment may result in increased default rates on mortgage loans we originated, which could expose us to repurchase obligations or other liabilities, reduce our ability to sell or finance the loans we originate or require us to sell or finance the loans we originate on less favorable terms, lead us to impose stricter loan qualification standards, or result in us no longer being able to offer financing terms that are attractive to potential buyers, all of which would adversely affect our Financial Services business.

Inflation has adversely affected and could continue to adversely affect our business and financial results, especially since we may not be able to raise home prices sufficiently to offset increased prices.

Although inflation eased somewhat in 2024, high inflation has adversely affected us in recent years by increasing the costs of land, materials and labor needed to operate our business and could continue to adversely affect us in future periods.

The announcements and implementation of widespread tariffs by the current U.S.

Presidential Administration and retaliatory tariffs imposed in response thereto could result in an inflationary environment having similar adverse effects.

In the event inflation increases again, we may seek to increase the sales prices of homes in order to maintain satisfactory margins.

High inflation has adversely affected us by increasing the costs of land, materials and labor needed to operate our business and could continue to adversely affect us in future periods.

In the event inflation continues, we may seek to increase the sales prices of homes in order to maintain satisfactory margins.

However, an oversupply of homes relative to demand and home prices being set several months before homes are delivered and affordability concerns may make any such increase difficult or impossible in future periods.

24 unchanged sentences

Our Financial Services segment can be adversely affected by reduced demand for our homes.

Nearly all of the mortgage loans closed by our Financial Services segment in 2024 were made to buyers of homes we built.

Nearly all of the mortgage loans closed by our Financial Services segment are made to buyers of homes we built.

Therefore, a decrease in the demand for our homes adversely affects the revenues of this segment of our business.

In the first six months of 2025, economic uncertainty, as described elsewhere in these risk factors, contributed to reduced demand for our homes compared to the prior period, which adversely affected our revenues and our Financial Services segment.

Future demand for our homes is uncertain and dependent upon interest rates for mortgage loans, consumer confidence, availability of credit, economic conditions and other factors, including those described elsewhere in this report, and it is possible that demand for our homes may decrease further in 2025 if current economic conditions persist or worsen.

In the first nine months of 2025, economic uncertainty, as described elsewhere in these risk factors, contributed to reduced demand for our homes compared to the prior period,

which adversely affected our revenues and our Financial Services segment.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors