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Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-25 · 219 added, 243 removed, 268 unchanged (63% of the section changed)

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Our primary focus is on constructing and selling single-family homes across entry-level, first-time move-up, second-time move-up and active adult markets, as well as homes under built-for-rent contracts.

To fully serve our homebuyers and capture ancillary business opportunities, we have financial services operations that offer title insurance and mortgage banking solutions.

Our markets have experienced sustained home affordability challenges and significant competition and although our net sales have increased from the prior year, the increase was below our expectations.

Despite ticking down since last year, mortgage interest rates and inflationary pressures remain elevated.

We believe uncertainty and interest rate volatility are keeping homebuyers on the sidelines.

We have consistently used incentives, such as mortgage buydowns, to sustain demand, and we have continued to build affordable speculative inventory at higher than historical levels.

Our asset-light strategy has allowed us to remain agile in these market conditions by strategically renegotiating lot option takedowns that align with our sales pace.

We continue to see the positive effects of our commitment to future growth, whether through organic efforts, acquisitions, or a combination of both, all while keeping an asset-light approach.

This strategy is reflected in our homebuilding revenues and closings, which grew by 18% and 17%, respectively, when comparing 2024 to 2023.

Notably, our acquisition of Crescent Homes played a significant role in these achievements.

We believe this success, coupled with our increased investments in our lot pipeline, inventories and construction starts, positions us well for the future.

We are optimistic based on the limited supply of homes, both new and existing resales, at affordable price points and demographic trends that continue to support favorable demand dynamics in our markets.

We believe that the current environment will continue to support faster inventory turnover and reinforce our shift towards spec sales for the foreseeable future.

Our strategy has also allowed us to continue to pursue opportunities that contribute to our long-term outlook, including acquiring Jet HomeLoans in July 2024 and Liberty Communities, LLC (“Liberty Communities”) in January 2025.

We anticipate future organic and acquisitive growth in the years ahead across our homebuilding and financial services operations.

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To fully serve our homebuyers and capture ancillary business opportunities, we have financial services operations that offer mortgage banking solutions and title insurance—inclusive of agency and underwriting services.

Additionally, we offer homeowners insurance and adjacent products to homebuyers.

Homebuyers across our markets continue to face significant affordability challenges, especially in entry-level price points.

These challenges have been exacerbated by macroeconomic uncertainty and have resulted in a decline in consumer confidence.

Considering this backdrop, we remain focused on providing competitive pricing relative to market demand, predominately through providing mortgage buydown commitments and incentives that align with each sales cycle.

While we face intense competition as well as macroeconomic and political headwinds in the short term, we are committed to our land-light strategy, our operational improvements and to building a high-quality, affordable product that meets our customers’ needs and differentiates us in our markets.

Our long-term outlook remains positive;

we are optimistic about future housing demand, especially given the undersupply of homes in the U.S.

Recent Developments

Liberty Communities Acquisition

On January 23, 2025, we acquired the majority of the homebuilding assets of Liberty Communities, allowing us to enter the Atlanta, Georgia market and further expand our operations in Greenville, South Carolina.

Assets acquired include over 750 lots and home sites in different stages of construction.

Additionally, the Company expects to control approximately 5,000 lots as a result of the transaction.

The operations of Liberty Communities will be included in our Southeast segment as of the date of acquisition.

Refer to Note 15, Subsequent Events to our consolidated financial statements for more information.

Expansion in the Southeast Segment

In the fourth quarter of 2024, we expanded organically into southwest Florida.

As of December 31, 2024, we controlled 42 lots in this market.

Alliant Title Acquisition

On October 18, 2024, the Company entered into a definitive agreement to acquire Colorado-based title insurance underwriter, Alliant National Title Insurance Company, Inc.

and a related affiliate.

The closing of this transaction is subject to customary closing conditions, including insurance regulatory approvals, which are currently ongoing.

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Sawgrass Marriott

In the fourth quarter of 2025, we entered into a strategic partnership to acquire the Sawgrass Marriott Golf Resort & Spa in Ponte Vedra Beach, Florida, a 66-acre parcel adjacent to the renowned PLAYERS Stadium Course at TPC Sawgrass.

This partnership provides opportunities to expand our lot pipeline and supports our future growth and profitability.

Results of Consolidated Operations

The following table summarizes our res ults of operations and other financial data (in thousands, except per share amounts) for the periods indicated:

The following table summarizes our res ults of operations and other financial data (in thousands, except per share amounts and percentages) for the periods indicated:

Income before taxes:

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Financial services 35,023 31,308

(28,413) (21,614)

Income before taxes 284,102 437,854

Income tax expense (66,698) (97,272)

Net and comprehensive income 340,582 307,942

Net and comprehensive income attributable to noncontrolling interests (5,241) (12,042)

Net and comprehensive income attributable to Dream Finders Homes, Inc.

Net income 217,404 340,582

Net income attributable to noncontrolling interests

(207) (5,241)

Net income attributable to Dream Finders Homes, Inc.

$ 217,197 $ 335,341

Other Financial Data:

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15.3 % 29.7 %

Consolidated Balance Sheets Data (as of period end):

Balance Sheet Data (as of period end):

Cash and cash equivalents $ 234,766 $ 274,384

Construction lines of credit 701,386 530,384

Revolving credit facility and other borrowings 822,296 701,386

Senior unsecured notes, net 591,060 295,049

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(1) Represents amounts within our corporate component (“Corporate”).

(2) Refer to Note 14, Earnings Per Share to the consolidated financial statements for disclosures related to the calculation of EPS.

(2) Refer to Note 15, Earnings Per Share to our consolidated financial statements for disclosures related to the calculation of earnings per share (“EPS”).

Diluted shares were calculated by using the treasury stock method for stock grants and the if-converted method for the redeemable preferred stock and the associated preferred dividends.

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(4) Calculated as a percentage of total revenues.

(5) Return on participating equity is calculated as net and comprehensive income attributable to DFH, less redeemable preferred stock distributions, divided by average beginning and ending total Dream Finders Homes, Inc.

(5) Return on participating equity is calculated as net income attributable to DFH, less redeemable preferred stock distributions, divided by average beginning and ending total Dream Finders Homes, Inc.

stockholders’ equity (“participating equity”) for the trailing twelve months.

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Results of Homebuilding Operations

The following table sets forth our results of homebuilding operations (in thousands) for the periods indicated:

The following table sets forth our results of homebuilding operations and other financial data (in thousands, except for percentages), as well as other operating data for the periods indicated:

2025 2024 Change % Change

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483,628 394,548 89,080 23 %

(Income) loss from unconsolidated entities (433) 12 (445) (3708) %

Loss (income) from unconsolidated entities 1 (433) 434 (100) %

Contingent consideration revaluation

(9,820) 13,939 (23,759) (170) %

Other income, net (1,443) (635) (808) 127 %

Total income before taxes related to homebuilding operations (1)(2)

Other expense (income), net

6,609 (1,443) 8,052 (558) %

Income before taxes of homebuilding operations

$ 241,575 $ 399,783 $ (158,208) (40) %

Other Financial and Operating Data:

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Cancellation rate 13.5 % 16.6 % (3.1) % (19) %

Homebuilding gross margin (in thousands) (4)

Homebuilding gross margin (2)

$ 721,993 $ 806,394 $ (84,401) (10) %

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17.4 % 18.3 % (0.9) % (5) %

Adjusted homebuilding gross margin (in thousands) (6)

Adjusted homebuilding gross margin (4)

$ 1,098,694 $ 1,186,019 $ (87,325) (7) %

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26.5 % 27.0 % (0.5) % (2) %

Selling, general and administrative expense % (3)

11.7 % 9.0 % 2.7 % 30 %

Active communities as of period end (5)

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41.8 % 33.7 % 8.1 % 24 %

(1) Selling, general and administrative expense, which is comprised of homebuilding segments and Corporate expense (“SG&A”), includes $33 million and $19 million of Corporate SG&A for the year ended December 31, 2024 and 2023, respectively.

Corporate amounts are included as they primarily relate to our homebuilding business.

(2) Contingent consideration revaluation, which is comprised of amounts from the homebuilding segments and Corporate, (“contingent consideration”) includes $3 million and $9 million of Corporate contingent consideration expense for the year ended December 31, 2024 and 2023, respectively.

Corporate amounts are included as they represent contingent consideration relating to our homebuilding business that the Company does not charge to the segments.

(1) Average sales price of homes closed is calculated based on homebuilding revenues, adjusted for the impact of percentage of completion revenues, and excluding deposit forfeitures and land sales, over homes closed.

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A community becomes inactive when it has fewer than five homesites remaining to sell.

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The following tables summarize home closings and average sales price (“ASP”) of homes closed by homebuilding segment for the year ended December 31, 2025 and 2024, as well as active communities as of December 31, 2025 and 2024:

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Total 8,583 $ 509,249 242

The following tables present income before taxes (in thousands) and homebuilding gross margin (or “gross margin”) percentage by segment for the year ended December 31, 2024 and 2023:

The following table presents income before taxes (in thousands) and homebuilding gross margin (or “gross margin”) percentage by segment for the years ended December 31, 2025 and 2024:

Year Ended December 31,

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$ 241,575 17.4 % $ 399,783 18.3 %

(1) Total income before taxes by segment does not include $33 million and $19 million of Corporate SG&A, and $3 million and $9 million of Corporate contingent consideration expense for the years ended December 31, 2024 and 2023, respectively.

These amounts are included within total income before taxes related to homebuilding operations, which is presented in the Results of Homebuilding Operations table above.

Refer to footnotes (1) and (2) above for more information.

Homebuilding Revenues.

The increase in homebuilding revenues was primarily attributable to 8,583 home closings for the year ended December 31, 2024, an increase of 1,269 homes, or 17%, from 7,314 home closings for the year ended December 31, 2023.

In 2024, 877 home closings with an ASP of $534,617 were contributed by the Crescent Homes acquisition.

The consolidated ASP of homes closed increased 1% when comparing the year ended December 31, 2024 to the year ended December 31, 2023.

Excluding Crescent Homes, 41% of our closings were in the Midwest segment with an ASP of $583,198, which is the highest ASP of our homebuilding segments.

Homebuilding Cost of Sales and Homebuilding Gross Margin.

The higher homebuilding cost of sales and homebuilding gross margin were primarily due to the increase in home closings for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The decrease in homebuilding gross margin as a percentage of homebuilding revenues when comparing the years ended December 31, 2024 and 2023 was primarily attributable to higher land and financing costs, partially offset by direct cost reductions and changes in product mix.

Additionally, amortization of purchase accounting adjustments associated with home closings from the Crescent Homes acquisition negatively impacted the year ended December 31, 2024 homebuilding gross margin percentage by approximately 12 bps.

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Our Southeast segment homebuilding revenues for the year ended December 31, 2024 were $1.4 billion, a decrease of $135 million, or 9%, from $1.5 billion for the year ended December 31, 2023.

This decline in revenue was driven by a decrease in home closings of 332, or 10%, partially offset by a 3% increase in the ASP of homes closed.

Homebuilding gross margin percentage was 19.1% for the year ended December 31, 2024, representing an increase of 20 bps, or 1%, when compared to the year ended December 31, 2023.

The increase in homebuilding gross margin percentage was mostly the result of direct cost reductions and, to a lesser extent, cycle time improvements, partially offset by higher land and financing costs.

The decrease in homebuilding revenues was primarily attributable to a lower consolidated ASP of homes closed, which decreased 6% when comparing the year ended December 31, 2025 to the year ended December 31, 2024, largely due to the increased use of sales incentives by $35 million and, to a lesser extent, changes in product mix during the year.

This reduction in homebuilding revenues was partially offset by an increase in home closings of 25 homes for the year ended December 31, 2025 to 8,608 from 8,583 home closings for the year ended December 31, 2024.

The January 2025 Liberty Communities acquisition contributed 744 home closings with an ASP of $335,446 during the year ended December 31, 2025.

Homebuilding Gross Margin.

The lower homebuilding gross margin was primarily due to the decrease in consolidated ASP of homes closed, partially offset by the slight increase in home closings for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

The decrease in homebuilding gross margin as a percentage of homebuilding revenues when comparing the years ended December 31, 2025 and 2024 was primarily attributable to the increased use of sales incentives, as well as higher land and financing costs and changes in geographical product mix, partially offset by direct cost reductions and cycle-time improvements.

Our Southeast segment homebuilding revenues for the year ended December 31, 2025 were $1,390 million, an increase of $3 million from $1,387 million for the year ended December 31, 2024.

This revenue growth was primarily driven by an increase in home closings of 288, or 10%, which was mostly offset by a decrease of 8% in the ASP of homes closed.

Homebuilding gross margin percentage was 18.6% for the year ended December 31, 2025, representing a decrease of 50 bps, or 3%, when compared to the year ended December 31, 2024.

The decrease in homebuilding gross margin percentage was mostly the result of higher land and financing costs and, to a lesser extent, increased sales incentives, partially offset by direct cost reductions.

The Liberty Communities operations in Atlanta (“Liberty Atlanta”) contributed $193 million in homebuilding revenues and 543 home closings with an ASP of $354,276 for the year ended December 31, 2025.

Mid-Atlantic.

Our Mid-Atlantic segment homebuilding revenues for the year ended December 31, 2024 were $1.2 billion, an increase of $530 million, or 84%, from $633 million for the year ended December 31, 2023.

This revenue growth was primarily driven by an increase in home closings of 997, or 62%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

Crescent Homes contributed $470 million in homebuilding revenues and 877 home closings with an ASP of $534,617 for the year ended December 31, 2024.

Excluding Crescent, homebuilding revenues in the Mid-Atlantic segment increased by 9% when comparing the year ended December 31, 2024 and 2023, primarily due to more home closings and, to a lesser degree, a higher ASP of $401,744, an increase of $5,282, or 1%, when compared to the year ended December 31, 2023.

Without Crescent, homebuilding gross margin percentage was 18.5% for the year ended December 31, 2024, representing an increase of 60 bps, or 3%, when compared to the year ended December 31, 2023.

The improvement in this homebuilding gross margin percentage was primarily a result of direct cost reductions and, to a lesser extent, cycle time improvements, partially offset by higher land and financing costs.

Our Midwest segment homebuilding revenues for the year ended December 31, 2024 were $1.8 billion, an increase of $264 million, or 17%, from $1.6 billion for the year ended December 31, 2023.

This increase was due to higher home closings of 604, or 24%, partially offset by a decrease of 6% in the ASP of homes closed.

The decrease in ASP of homes closed was due to changes in the geographic mix of closings within the segment.

Homebuilding gross margin percentage was 17.0% for the year ended December 31, 2024, representing a decrease of 360 bps, or 17%, when compared to year ended December 31, 2023.

The reduction in homebuilding gross margin percentage was due to an increase in land costs and, to a lesser extent, higher financing costs, partially offset by direct cost reductions.

Our Mid-Atlantic segment homebuilding revenues for the year ended December 31, 2025 were $1,062 million, a decrease of $101 million, or 9%, from $1,163 million for the year ended December 31, 2024.

This decline in revenue was primarily driven by a decrease in home closings of 131, or 5%, and a decrease in the ASP of $20,292, or 5%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Homebuilding gross margin percentage was 18.3% for the year ended December 31, 2025, representing a decrease of 130 bps, or 7%, when compared to the year ended December 31, 2024.

The reduction in homebuilding gross margin percentage was mainly due to increased sales incentives and land and financing costs, partially offset by direct cost reductions.

Our Midwest segment homebuilding revenues for the year ended December 31, 2025 were $1,693 million, a decrease of $155 million, or 8%, from $1,848 million for the year ended December 31, 2024.

This decrease was primarily due to a decrease of 5% in the ASP of homes closed, as well as lower home closings of 132, or 4%, partially offset by strategic lot sales within the segment, which resulted in $12 million of additional homebuilding revenues during the year ended December 31, 2025 as compared to the previous period.

Homebuilding gross margin percentage was 15.8% for the year ended December 31, 2025, representing a decrease of 120 bps, or 7%, when compared to the year ended December 31, 2024.

The reduction in homebuilding gross margin percentage was primarily due to changes in product mix and higher sales incentives, as well as increased land and financing costs, partially offset by direct cost reductions.

Selling, General and Administrative Expense.

SG&A as a percentage of homebuilding revenues was 9.0% for the year ended December 31, 2024, a slight increase of 90 bps from 8.1% for the year ended December 31, 2023.

The dollar increase in SG&A was primarily attributable to higher compensation costs of $51 million due to our growth from continued expansion, including the February 2024 acquisition of Crescent Homes and our operational expansions in Florida and Arizona.

Additionally, for the year ended December 31, 2024, SG&A included $50 million of spend on forward commitment programs to allow our homebuyers to access lower mortgage interest rates on home loans at the point of sale, representing a $22 million increase when compared to the year ended December 31, 2023.

Selling, general and administrative expense for the homebuilding segments (“SG&A”) as a percentage of homebuilding revenues was 11.7% for the year ended December 31, 2025, an increase of 270 bps from 9.0% for the year ended December 31, 2024.

The dollar and percentage increase in SG&A was primarily attributable to $105 million of spend on forward mortgage commitment programs to allow our homebuyers to access lower mortgage interest rates on home loans, representing a $54 million increase when compared to the year ended December 31, 2024.

Additionally, for the year ended December 31, 2025, SG&A included higher marketing and model home related expenses of $10 million due to the increased active community count, as well as higher compensation costs of $5 million, largely due to our continued growth, including from acquisitions and operational expansions into new geographic regions.

The impact of the Liberty acquisition was $24 million of SG&A in the year ended December 31, 2025.

Contingent Consideration Revaluation.

$30 million of the decrease in contingent consideration expense for the year ended December 31, 2024 was attributable to lower fair value adjustments of future expected earnout payments related to the MHI acquisition, as actual results remained in line with forecasts when compared to the year ended December 31, 2023.

As the earnout period for the MHI acquisition is nearing its completion in the third quarter of 2025, it is less susceptible to changes in long-term underlying projections.

Additionally, the earnout period related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC concluded in the third quarter of 2024 and the final payment for the contingent consideration agreement was made in the fourth quarter of 2024.

Income Before Taxes Related to Homebuilding Operations.

The increase in income before taxes related to homebuilding operations during the year ended December 31, 2024 as compared to the year ended December 31, 2023 was primarily attributable to the increase in home closing volume and the reduction in contingent consideration expense, partially offset by the increase in SG&A, all explained above.

The $24 million change from contingent consideration expense to income for the year ended December 31, 2025 was primarily attributable to lower actual results achieved during the last earnout period for the MHI acquisition when compared to pre-tax income forecasts for the same period.

The earnout period for the MHI acquisition concluded as of the end of the third quarter of 2025 and the final payment was made in December 2025.

The earnout period related to the 2020 acquisition of H&H Constructors of Fayetteville, LLC concluded in the third quarter of 2024.

Other Expense (Income), Net .

The increase in other expense, net for the year December 31, 2025 as compared to the year ended December 31, 2024 was primarily due to $7 million of purchase price adjustments related to the Crescent acquisition, which were recognized outside of the measurement period during the first quarter of 2025.

Refer to Note 2, Acquisitions to our consolidated financial statements for additional information.

Income before Taxes of Homebuilding Operations.

The decrease in income before taxes of homebuilding operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024 was primarily attributable to the increases in SG&A, as well as the reduction in ASP and homebuilding gross margin, partially offset by the change in contingent consideration from expense to income, all of which are explained above.

Refer to the Form 10-K for the year e nded December 31, 2024 filed on February 25, 2025 for the results of operations and related discussion for December 31, 2024 compared to the year ended December 31, 2023 .

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Net Sales, Backlog and Closings

The following table presents information concerning our net sales, starts and c losings in each of our homebuilding segments for the periods set forth below:

Net Sales, Closings and Backlog

The following table presents information concerning our net sales, starts and c losings in each of our homebuilding segments for the year ended December 31, 2025 and 2024 :

Year Ended December 31, Period Over Period

Percent Change

Segment Net Sales

Starts Closings

Segment Net Sales Starts Closings Net Sales Starts Closings Net Sales

Southeast (1)

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Mid-Atlantic 2,397 2,645 2,463 2,196 2,623 2,594 9 % 1 % -5 %

Midwest 2,777 3,252 3,151 2,562 2,551 2,547 8 % 27 % 24 %

2,623 2,742 3,019 2,777 3,252 3,151 -6 % -16 % -4 %

Total 7,747 8,197 8,608 6,727 8,743 8,583 15 % -6 % 1 %

(1) Excluding net sales under built-for-rent contracts, 2024 net sales in the Southeast segment increased 9% when compared to 2023.

The year ended December 31, 2024 also included a built-for-rent contract termination discussed further below.

(2) Closings under built-for-rent contracts decreased 18% when comparing the year ended December 31, 2024 to the year ended December 31, 2023.

(1) This increase was primarily due to net sales from the January 2025 Liberty Communities acquisition.

(2) The lower net sales and starts in the Midwest segment were primarily the result of weakening demand in the Texas markets.

The following table presents information concerning our backlog in number of homes, ASP and aggregate value (in thousands) for our homebuilding segments as of the dates set forth below:

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ASP Value Homes

Southeast 1,150 $ 406,246 $ 467,183 2,234 $ 393,356 $ 878,757

Mid-Atlantic (2)

833 $ 412,422 $ 343,548 1,150 $ 406,246 $ 467,183

Mid-Atlantic 631 367,559 231,930 678 464,798 315,133

Midwest 375 655,505 245,814 771 677,234 522,147

Total 1,839 $ 446,597 $ 821,292 2,599 $ 501,910 $ 1,304,463

(1) Represents the number of homes in backlog from the previous period, plus net sales during the period, minus the number of home closings during the current period.

(2) On February, 1 2024, backlog increased by 477 due to our Crescent Homes acquisition on that date.

235 of the homes in backlog as of December 31, 2024 are from Crescent Homes.

Backlog of sold homes as of December 31, 2024 was 2,599 homes valued at approximately $1.3 billion based on ASP, a decrease of 1,379 homes and $583 million in value, or 35% and 31%, respectively, from 3,978 homes valued at approximately $1.9 billion as of December 31, 2023.

The overall decrease in backlog was mostly reflective of a continued trend toward move-in ready spec homes relative to pre-order sales, and to a lesser extent, a reduction in built-for-rent contracts in backlog.

Spec homes typically result in quicker closings and turnover of the backlog within the same reporting period.

Backlog of sold homes as of December 31, 2025 was 1,839 homes valued at approximately $821 million based on ASP, a decrease of 760 homes and $483 million in value, or 29% and 37%, respectively, from 2,599 homes valued at approximately $1,304 million as of December 31, 2024.

Approximately 72 of the homes in our backlog are expected to be delivered in 2027 and beyond.

The overall decrease in backlog was reflective of a constrained sales environment as well as a continued trend toward move-in ready spec homes relative to pre-order sales and, to a lesser extent, fewer built-for-rent contracts in backlog.

Spec homes typically result in quicker closings and turnover of the backlog within the same reporting period.

Backlog for the Southeast segment as of December 31, 2025 was 833 homes, a decrease of 317 from 1,150 homes as of December 31, 2024.

The decrease from prior year was primarily attributable to a continued trend toward move-in ready spec homes relative to pre-order sales and a reduction in net sales under built-for-rent contracts.

The decrease from prior year was primarily attributable to fewer built-for-rent contracts in ending backlog and a continued trend toward more sales of move-in-ready spec homes relative to pre-order sales.

Mid-Atlantic.

Backlog for the Mid-Atlantic segment as of December 31, 2024 was 678 homes, an increase of 79 from 599 homes as of December 31, 2023.

The increase in backlog from prior year was attributable to the Crescent Homes acquisition and, to a lesser extent, higher net sales relative to closings, partially offset by lower net sales relative to closings under built-for-rent contracts.

Backlog for the Mid-Atlantic segment as of December 31, 2025 was 631 homes, a decrease of 47 from 678 homes as of December 31, 2024.

The decrease in backlog from prior year was primarily attributable to the constrained sales environment and the continued trend toward more sales of move-in-ready spec homes relative to pre-order sales.

The decline in backlog value was also due to an increase in built-for-rent contracts in backlog this period, which have lower ASPs relative to retail sales contracts in backlog.

Backlog for the Midwest segment as of December 31, 2025 was 375 homes, a decrease of 396 from 771 homes as of December 31, 2024.

The decrease from prior year was mostly a result of higher closings relative to net sales, as well as the continued trend toward more sales of move-in-ready spec homes relative to pre-order sales.

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Lower net sales in the Midwest segment were primarily the result of weakening Texas markets.

The following table presents information concerning our cancellation rates for each of our homebuilding segments for the periods set forth below:

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13.5 % 16.6 %

(1) Our cancellation rate for a given period is calculated as the total number of new sales contracts cancelled during the period, divided by the total number of new home sales contracts entered into during the period.

Our cancellation rate for the year ended December 31, 2024 was 16.6%, an improvement of 170 basis points when compared to the 18.3% cancellation rate for the year ended December 31, 2023.

The overall improvement in cancellation rate was mostly a result of the trend toward higher spec sales relative to pre-order sales.

The higher cancellation rate in the Southeast segment for the year ended December 31, 2024 was primarily attributable to a built-for-rent contract of 229 units that was terminated during the first quarter of 2024 based on a strategic decision to convert the controlled lots underlying the deal into future retail sales.

The total cancellation rate and the Southeast cancellation rate excluding built-for-rent activity were 14.1% and 13.4%, respectively, for the year ended December 31, 2024.

Our cancellation rate for the year ended December 31, 2025 was 13.5%, an improvement when compared to the 16.6% for the year ended December 31, 2024.

In the first quarter of 2024, we had one built-for-rent contract of 229 units that was terminated based on a strategic decision to convert the controlled lots into future retail sales.

This termination contributed to the elevated cancellation rate in the Southeast segment for the year ended December 31, 2024 of 23.7%.

Financial Services

Our Financial Services segment provides mortgage financing and title services primarily through our wholly owned subsidiaries, Jet HomeLoans and DF Title, respectively.

Our Financial Services segment provides mortgage banking solutions and title insurance services—inclusive of agency and underwriting services—through our wholly-owned subsidiaries Jet HomeLoans, LP (“Jet HomeLoans”), DF Title, LLC doing business as Golden Dog Title & Trust and Golden Dog Title (“DF Title”) and Alliant National Title Insurance Company, Inc.

(“Alliant Title”).

Additionally, the Financial Services segment offers homeowners insurance and ancillary products to homebuyers through our wholly-owned insurance broker.

The following table presents selected financial information and supplemental data for our Financial Services segment for the year ended December 31, 2025 and 2024 (dollars in thousands, unless otherwise indicated):

Year Ended December 31,

2025 2024 Change % Change

Mortgage revenues $ 68,536 $ 34,786 $ 33,750 97 %

Title services revenues 18,943 9,698

Title and other services revenues

108,965 17,189 91,776 534 %

Total financial services revenues 177,501 51,975 125,526 242 %

Financial services expense 144,727 30,437 114,290 375 %

Income from unconsolidated entities 9,770 15,770

Other income, net

(2,388) — (2,388) 100 %

Loss (income) from unconsolidated entities 139 (9,770) 9,909 (101) %

Financial services income before taxes $ 35,023 $ 31,308 $ 3,715 12 %

Supplemental data (1) :

Mortgage Financing Supplemental Data (1) :

Total originations:

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Non-agency 48.1 % 60.3 % (12) % (20) %

(1) Supplemental data reflects operations of Jet HomeLoans prior to its consolidation in the Company’s financial statements beginning on July 1, 2024.

Refer to Note 2, Acquisitions to the consolidated financial statements for additional information.

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The $35 million, or 100%, increase in mortgage revenues, $21 million of the increase in financial services expense and $11 million of the increase in the financial services income before taxes for the year ended December 31, 2024 as compared to the year ended December 31, 2023, respectively, were all primarily due to the consolidation of Jet HomeLoans beginning July 1, 2024.

The income before taxes of Jet HomeLoans prior to July 1, 2024 was included in income from unconsolidated entities in the Consolidated Statements of Comprehensive Income.

The $9 million, or 95%, increase in title services revenues, $5 million of the increase in financial services expense and $4 million of the increase in the financial services income before taxes for the year ended December 31, 2024 as compared to the year ended December 31, 2023, were primarily the result of DF Title’s expansion of operations into the Texas market.

Our Texas market was previously serviced by our unconsolidated title joint ventures, which resulted in a partially offsetting impact to financial services income before taxes of $2 million.

(1) Supplemental data includes the operations of Jet HomeLoans prior to its consolidation in the Company’s consolidated financial statements beginning on July 1, 2024.

Refer to Note 2, Acquisitions to our consolidated financial statements for additional information.

Mortgage Banking

Mortgage banking revenues for the year ended December 31, 2025 were $69 million, an increase of $34 million or 97%, from $35 million for the year ended December 31, 2024.

Financial services income before taxes related to mortgage banking for the year ended December 31, 2025 was $28 million, an increase of $6 million from $22 million for the year ended December 31, 2024.

These increases were primarily due to the consolidation of Jet HomeLoans beginning July 1, 2024.

The income before taxes of Jet HomeLoans prior to July 1, 2024 was included in income from unconsolidated entities in the Consolidated Statements of Operations.

Title and Other Services

Title and other services revenues for the year ended December 31, 2025 were $109 million, an increase of $92 million from $17 million for the year ended December 31, 2024.

Financial services income before taxes related to title and other services for the year ended December 31, 2025 was $8 million, a decrease of $1 million from $9 million for the year ended December 31, 2024.

The changes in the results were mostly due to the April 2025 acquisition of Alliant Title.

Non-GAAP Financial Measures

Management utilizes specific non-GAAP financial measures as supplementary tools to evaluate operating performance.

These include adjusted homebuilding gross margin, EBITDA, and net homebuilding debt to net capitalization.

These include EBITDA, adjusted homebuilding gross margin, and net homebuilding debt to net capitalization.

Other companies may not calculate non-GAAP financial measures in the same manner that we do.

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In the future, we may incorporate additional adjustments to these non-GAAP financial measures as we find them relevant and beneficial for both management and investors.

Adjusted Homebuilding Gross Margin

We define adjusted homebuilding gross margin as homebuilding gross margin excluding the effects of capitalized interest, lot option fees, amortization included in homebuilding cost of sales (adjustments resulting from the application of purchase accounting in connection with acquisitions) and commission expense.

Our management believes this information is meaningful because it isolates the impact that these excluded items have on homebuilding gross margin.

We include internal and external commission expense in homebuilding cost of sales, not selling, general and administrative expense, and therefore commission expense is taken into account in homebuilding gross margin.

As a result, in order to provide a meaningful comparison to the public company homebuilders that include commission expense below the homebuilding gross margin line in selling, general and administrative expense, we have excluded commission expense from adjusted homebuilding gross margin.

However, because adjusted homebuilding gross margin information excludes capitalized interest, lot option fees, purchase accounting amortization and commission expense, which have real economic effects and could impact our results of operations, the utility of adjusted homebuilding gross margin information as a measure of our operating performance may be limited.

The following table presents a reconciliation of adjusted homebuilding gross margin to the GAAP financial measure of homebuilding gross margin for each of the periods indicated (unaudited and in thousands, except percentages):

Year Ended December 31,

2024 2023 2022

Homebuilding gross margin (1)

$ 806,394 $ 727,075 $ 612,420

Interest expense in homebuilding cost of sales (2)

187,324 122,759 60,595

Amortization in homebuilding cost of sales (3)

5,087 — 6,701

Commission expense 187,214 165,790 140,442

Adjusted homebuilding gross margin $ 1,186,019 $ 1,015,624 $ 820,158

Homebuilding gross margin % (4)

18.3 % 19.4 % 18.4 %

Adjusted homebuilding gross margin % (4)

27.0 % 27.2 % 24.6 %

(1) Homebuilding gross margin is homebuilding revenues less homebuilding cost of sales.

(2) Includes interest charged to homebuilding cost of sales related to our construction lines of credit and senior unsecured notes, net, as well as lot option fees.

(3) Represents amortization of purchase accounting adjustments from our acquisitions.

(4) Calculated as a percentage of homebuilding revenues.

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EBITDA is not a measure of net income as determined by GAAP.

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2025 2024 2023

Net and comprehensive income attributable to Dream Finders Homes, Inc.

Net income attributable to Dream Finders Homes, Inc.

$ 217,197 $ 335,341 $ 295,900

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11.4% 14.2% 13.9%

(1) Includes interest charged to homebuilding cost of sales related to our construction lines of credit and senior unsecured notes, net, as well as lot option fees.

(1) Includes interest charged to homebuilding cost of sales related to our Senior Notes and Credit Agreement (“homebuilding debt”), as well as lot option fees.

(2) Includes amortization of purchase accounting adjustments from our acquisitions.

(3) Calculated as a percentage of total revenues.

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Adjusted Homebuilding Gross Margin

Our management believes this information is meaningful as it isolates the impact that these excluded items have on homebuilding gross margin.

We include internal and external commission expense in homebuilding cost of sales, not in selling, general and administrative expense, and, therefore, commission expense is taken into account in homebuilding gross margin.

Year Ended December 31,

2025 2024 2023

Homebuilding gross margin (1)

$ 721,993 $ 806,394 $ 727,075

Interest expense in homebuilding cost of sales (2)

196,728 187,324 122,759

Amortization in homebuilding cost of sales (3)

Commission expense 179,668 187,214 165,790

Adjusted homebuilding gross margin $ 1,098,694 $ 1,186,019 $ 1,015,624

Homebuilding gross margin % (4)

17.4 % 18.3 % 19.4 %

Adjusted homebuilding gross margin % (4)

26.5 % 27.0 % 27.2 %

(1) Homebuilding gross margin is homebuilding revenues less homebuilding cost of sales.

(2) Includes interest charged to homebuilding cost of sales related to our homebuilding debt, as well as lot option fees.

(3) Represents amortization of purchase accounting adjustments from our acquisitions.

(4) Calculated as a percentage of homebuilding revenues.

Net Homebuilding Debt to Net Capitalization

Net homebuilding debt to net capitalization is a non-GAAP financial measure that is the sum of construction lines of credit and senior unsecured notes, net less cash and cash equivalents (“net homebuilding debt”), divided by the sum of net homebuilding debt, total mezzanine equity and total equity (“net capitalization”).

Net homebuilding debt excludes borrowings under our mortgage warehouse facilities.

Management believes the ratio of net homebuilding debt to net capitalization is meaningful as it is used to assess the performance of our homebuilding segments, as well as to establish targets for performance-based compensation.

We also use this ratio as a measure of overall leverage.

The following table presents a reconciliation of net homebuilding debt to net capitalization to the GAAP financial measure of total debt to total capitalization for each of the periods indicated (unaudited and in thousands, except percentages):

Net homebuilding debt to net capitalization is a non-GAAP financial measure calculated as homebuilding debt, less cash and cash equivalents (“net homebuilding debt”), divided by the sum of net homebuilding debt, total mezzanine equity and total equity (“net capitalization”).

Net homebuilding debt excludes borrowings under our mortgage warehouse facilities, as well as any other non-homebuilding borrowings the Company may incur from time to time.

Management believes the ratio of net homebuilding debt to net capitalization is meaningful as it is used to assess the performance of our homebuilding segments and is a relevant measure of our overall leverage.

The Company utilizes a similar measure—net debt to capitalization, as defined in the Credit Agreement—to establish targets for performance-based compensation.

The following table presents a reconciliation of net homebuilding debt to net capitalization to the GAAP financial measure of total debt to total capitalization as of each of the periods indicated (unaudited and in thousands, except percentages):

Total debt $ 1,606,193 $ 1,286,052

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Total debt $ 1,606,193 $ 1,286,052

Mortgage warehouse facilities 289,617 —

Mortgage warehouse facilities and other secured borrowings

217,133 289,617

Cash and cash equivalents 234,766 274,384

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Net homebuilding debt to net capitalization

41.8 % 33.7 %

Liquidity and Capital Resources

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We believe that our sources of liquidity are sufficient to satisfy our current commitments.

We finance our operations through a variety of sources, including cash, borrowings under a revolving credit facility (the “Credit Agreement”), net proceeds from the senior unsecured notes (“2028 Notes”) and mortgage warehouse facilities used in our mortgage banking operations.

We finance our operations through a variety of sources, including cash, borrowings under a revolving credit facility (the “Credit Agreement”), net proceeds from the senior unsecured notes (“Senior Notes”) and mortgage warehouse facilities used in our mortgage banking operations.

Our principal uses of capital are for lot deposits, lot purchases just-in-time for construction, vertical home construction, operating expenses, the payment of routine liabilities, business acquisitions and the origination of mortgage loans.

Cash allocated to 2024 business acquisitions was approximately $220 million as of December 31, 2024 and none as of December 31, 2023.

There was no acquisition activity in 2023.

Refer to Note 2, Acquisitions to the consolidated financial statements for more information.

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As of December 31, 2024 and 2023, our cash and total liquidity were as follows (in thousands):

Borrowing base (1)

$ 1,254,094 $ 864,272

Outstanding balance under Credit Agreement (700,000) (530,000)

Letters of credit outstanding (2)

Availability under Credit Agreement $ 541,645 $ 334,272

Cash and cash equivalents (3)

274,384 494,145

Total liquidity $ 816,029 $ 828,417

(1) As of December 31, 2024 and 2023, the borrowing base under the Credit Agreement was reduced by the principal amount of the senior unsecured notes of $300 million.

(2) The availability under the Credit Agreement is reduced by outstanding letters of credit that are not fully cash collateralized.

(3) Includes cash and cash equivalents reported on the Consolidated Balance Sheets related to financial services operations, which are not subject to restrictions and are regularly remitted to Corporate.

As of December 31, 2024, the Credit Agreement had an aggregate commitment of up to $1.4 billion.

The Credit Agreement will mature on June 4, 2027.

Certain of our subsidiaries guaranteed the Company’s obligations under the Credit Agreement and the 2028 Notes.

As of December 31, 2024, we were in compliance with the covenants set forth for all of our debt obligations.

Refer to Note 3, Debt, to the consolidated financial statements for more information on the Credit Agreement, 2028 Notes and the mortgage warehouse facilities.

Total cash payments for business acquisitions for the years ended December 31, 2025 and 2024 were $184 million and $178 million, respectively.

Refer to Note 2, Acquisitions to our consolidated financial statements for more information.

Cash flows generated by our homebuilding projects can differ materially from our results of operations, as these depend upon the stage in the life cycle of each project.

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Our lot deposits are generally 100% applicable to the lot purchase price.

In these transactions, we also incur lot option fees on the outstanding capital balance held by the land banker.

In these transactions, we also incur lot option fees on the outstanding capital balance held by the land banker, and may also incur termination fees, where applicable.

The initial investment and lot option fees require us to have the ability to allocate liquidity resources to projects that will not generate cash inflows or operating income in the near term.

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The above cash and land-light strategies allow us to maintain an adequate lot supply in our existing markets and support ongoing growth and profitability.

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As of December 31, 2025 and 2024, our lot deposits related to finished lot option contracts and land bank option contracts were $545 million and $458 million, respectively.

As of December 31, 2025 and 2024, our total liquidity was as follows (in thousands):

Borrowing base (1)

$ 1,475,000 $ 1,254,094

Outstanding balance under Credit Agreement (798,000) (700,000)

Letters of credit outstanding (2)

(12,449) (12,449)

Availability under Credit Agreement 664,551 541,645

Cash and cash equivalents (3)

234,766 274,384

Total liquidity $ 899,317 $ 816,029

(1) As of December 31, 2025 and 2024, the borrowing base under the Credit Agreement is reduced by the principal amount of the Senior Notes of $600 million and $300 million, respectively.

As of December 31, 2025, the borrowing base calculation included available cash and escrow receivables in excess of $25 million.

Refer to Note 3, Debt to our consolidated financial statements for additional information.

(2) The availability under the Credit Agreement is reduced by outstanding letters of credit issued under the Credit Agreement, which are not cash collateralized.

(3) Represents cash and cash equivalents on the Consolidated Balance Sheets, which includes cash and cash equivalents related to financial services operations, which are not subject to restrictions and are regularly remitted to Corporate.

On August 21, 2025, we amended the Credit Agreement to, among other things, (i) increase the aggregate commitments under the Credit Agreement to $1.5 billion, subject to a borrowing base;

(ii) extend the maturity date from June 4, 2027 to August 21, 2028 for certain new and existing lenders comprising $1.2 billion of the aggregate commitments under the Credit Agreement, and;

(iii) update the minimum tangible net worth covenant, which resulted in an increase to the base component of such covenant to $981 million.

On September 5, 2025, we issued $300 million in aggregate principal amount of 6.875% senior unsecured notes due September 15, 2030 (the “2030 Notes”).

Interest on the 2030 Notes is payable in arrears semiannually on each March 15 and September 15, beginning March 15, 2026.

The net proceeds from the 2030 Notes were used to repay a portion of the then outstanding balance under the Credit Agreement.

Certain of our subsidiaries guaranteed the Company’s obligations under the Credit Agreement and the Senior Notes.

As of December 31, 2025, we were in compliance with the covenants set forth for all of our debt obligations.

See below for more information on the Credit Agreement, Senior Notes and the mortgage warehouse facilities.

We continue to evaluate our overall capital structure and explore options to strengthen our balance sheet.

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Net cash provided by (used in) financing activities 270,984 269,689 (216,424)

Net cash used in operating activities was $257 million for the year ended December 31, 2024, compared to $374 million of net cash provided by operating activities for the year ended December 31, 2023.

The change in net cash (used in)/provided by operating activities was primarily driven by higher lot deposits of $240 million, the $189 million increase of mortgage loans held for sale resulting from the Jet HomeLoans acquisition on July 1, 2024, higher increases in inventories in 2024 of $86 million as a result of higher construction starts and lot purchases and lower customer deposit activity in 2024.

All of these changes are inclusive of the impact of acquisitions related to Crescent Homes and Jet HomeLoans.

Net cash used in investing activities was $222 million for the year ended December 31, 2024, compared to $4 million of net cash used in investing activities for the year ended December 31, 2023, primarily attributable to the acquisition of Crescent Homes on February 1, 2024 for a purchase price of $210 million, of which $188 million was paid during the year ended December 31, 2024, partially offset by net cash acquired of $10 million from the Jet HomeLoans acquisition, which was in excess of $9 million of cash consideration paid for the transaction.

To a lesser extent, the change was also driven by $14 million in cash paid for the purchase of an aircraft for corporate use and $11 million in deposits placed for our pending acquisitions.

Net cash provided by financing activities was $270 million for the year ended December 31, 2024, as compared to $216 million of net cash used in financing activities for the year ended December 31, 2023.

The change in net cash provided by/(used in) financing activities was primarily attributable to net proceeds from our homebuilding debt of $171 million during the year ended December 31, 2024 used to release housing starts and purchase lots for our homebuilding operations, compared to $136 million of net homebuilding debt repayments during the year ended December 31, 2023.

Additionally, there were $180 million of net proceeds from the mortgage warehouse facilities during the year ended December 31, 2024 resulting from the Jet HomeLoans acquisition.

Net cash used in operating activities was $101 million for the year ended December 31, 2025, compared to $257 million of net cash used in operating activities for the year ended December 31, 2024.

The change in net cash used in operating activities are positively impacted by a reduction of $98 million in mortgage loans held for sale from the beginning of the current period compared to an increase of $189 million in the prior year, as well as $129 million from reduced expenditures on lot deposits.

These positive changes in net cash used in operating activities were partially offset by the decrease in net income of $123 million, a larger reduction in accounts payable and accrued expenses of $92 million and increased spend on inventories of $61 million when compared to the prior year period.

The changes in net cash used in operating activities are net of the effects of the Crescent Homes, Liberty Communities, Alliant Title and Green River Builders acquisitions.

Net cash used in investing activities was $226 million for the year ended December 31, 2025, compared to $222 million of net cash used in investing activities for the year ended December 31, 2024, mostly attributable to a $9 million increase in investments in unconsolidated entities, partially offset by a $5 million decrease in acquisition related payments.

Net cash provided by financing activities was $271 million for the year ended December 31, 2025, remaining consistent with the $270 million of net cash provided by financing activities for the year ended December 31, 2024.

The net cash provided by financing activities in 2025 included a net increase in homebuilding related borrowings of $313 million compared to the prior year.

The increase was mostly offset by net repayments of $97 million for our mortgage warehouse facilities during the year compared to $180 million in net proceeds in the prior year, and higher common stock repurchases of $34 million relative to the comparative period.

Refer to the Form 10-K for the year ended December 31, 2024 filed on February 25, 2025 for the cash flows and related discussion for December 31, 2024 compared to year ended December 31, 2023.

Senior Unsecured Notes

On August 22, 2023, the Company issued $300 million in aggregate principal amount of 8.25% senior unsecured notes due August 15, 2028, which were issued pursuant to an indenture (the “Indenture”).

Interest on the 2028 Notes is payable in arrears semiannually on each February 15 and August 15.

The 2030 Notes in the aggregate principal amount of $300 million were issued pursuant to an indenture in September 2025.

Interest on the 2030 Notes is payable in arrears semiannually on each March 15 and September 15, beginning March 15, 2026.

The 2030 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of the Company’s subsidiaries.

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The Company received net proceeds from the issuance and sale of the 2028 Notes of $294 million after unamortized debt issuance costs of $7 million, which reduce the carrying value of the 2028 Notes reported on the Consolidated Balance Sheets.

The net proceeds from the 2028 Notes were used to repay a portion of the then outstanding balance under the Company’s Credit Agreement.

The 2028 Notes are redeemable by the Company prior to August 15, 2025 through the payment of the principal amount due, which can be accomplished through the issuance of certain restricted equity offerings for specified portions of principal notes outstanding, plus specified rates and accrued and unpaid interest, and a make-whole premium in the event 100% of the principal amount is redeemed.

On or after August 15, 2025, the 2028 Notes are redeemable at specified rates equal to 104.1% of the principal balance, plus accrued and unpaid interest, and periodically decrease to 100% on August 15, 2027.

Upon the occurrence of a Change of Control (as defined in the Indenture), the holders of the 2028 Notes will have the right to require the Company to repurchase all or a portion of the 2028 Notes at a price equal to 101% of the aggregate principal amount of the 2028 Notes, plus any accrued and unpaid interest.

The Indenture includes customary events of default.

Subject to specified exceptions, the Indenture contains certain restrictive covenants that, among other things, limit our ability to incur or guarantee certain indebtedness, issue certain equity interests or engage in certain capital stock transactions.

In addition, the Indenture contains certain limitations related to mergers, consolidations, and transfers of assets.

The net proceeds from the 2030 Notes were used to repay a portion of the then outstanding balance under the revolving credit facility.

The 2030 Notes are redeemable by the Company prior to September 15, 2027 by the payment of the principal amount due, which can be accomplished through the issuance of certain restricted equity offerings for specified portions of the principal balance of notes outstanding, plus specified rates and accrued and unpaid interest, and a make-whole premium in the event 100.0% of the principal amount is redeemed.

On or after September 15, 2027, the 2030 Notes are redeemable at specified rates, initially equal to 103.4% of the principal balance, plus accrued and unpaid interest, which periodically decreases to 100.0% on September 15, 2029.

Upon the occurrence of a Change of Control (as defined in the indenture governing the 2030 Notes), the holders of the 2030 Notes will have the right to require the Company to repurchase all or a portion of the 2030 Notes at a price equal to 101% of the aggregate principal amount of the 2030 Notes, plus any accrued and unpaid interest.

On August 22, 2023, the Company issued $300 million in aggregate principal amount of 8.250% senior unsecured notes due August 15, 2028 (the “2028 Notes”) pursuant to an indenture.

Commencing February 15, 2024, interest on the 2028 Notes is payable in arrears semiannually on each February 15 and August 15.

The 2028 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of the Company’s subsidiaries.

The 2028 Notes are redeemable at specified rates, currently equal to 104.1% of the principal balance, plus accrued and unpaid interest, which will periodically decrease to 100.0% on August 15, 2027.

Upon the occurrence of a Change of Control (as defined in the indenture governing the 2028 Notes), the holders of the 2028 Notes will have the right to require the Company to repurchase all or a portion of the 2028 Notes at a price equal to 101.0% of the aggregate principal amount of the 2028 Notes, plus any accrued and unpaid interest.

The indentures for the Senior Notes include customary events of default.

Subject to specified exceptions, the indentures contain certain restrictive covenants that, among other things, limit the Company’s ability to incur or guarantee certain indebtedness, issue certain equity interests or engage in certain capital stock transactions.

In addition, the indentures contain certain limitations related to mergers, consolidations, and transfers of assets.

As of December 31, 2025 and December 31, 2024, unamortized debt issuance costs were $9 million and $5 million, respectively.

Unamortized debt issuance costs reduce the carrying value of the Senior Notes reported on the Consolidated Balance Sheets within senior unsecured notes, net.

Credit Agreement

On June 6, 2024, the Company entered into an amendment to its existing revolving credit facility (as amended, the “Credit Agreement”).

The amendment, among other things, (i) provides for an increase in the aggregate commitments under the revolving credit facility to $1.4 billion, subject to a borrowing base;

(ii) extends the maturity date from July 17, 2026 to June 4, 2027 for certain new and existing lenders comprising $1.3 billion of the $1.4 billion of aggregate commitments under the Credit Agreement;

and (iii) provides the Company with the ability to incur certain additional unsecured debt.

Certain of our subsidiaries guaranteed the Company’s obligations under the Credit Agreement.

The Credit Agreement includes an accordion feature that allows the aggregate commitments to increase to up to $2.0 billion, subject to a borrowing base.

Under the Credit Agreement, the Company has the ability to draw “Term SOFR Rate Loans” or “Daily Simple SOFR Rate Loans”.

Term SOFR Rate Loans bear interest based on Term SOFR rates for one or three-month interest periods and include a SOFR adjustment of 10 basis points for each interest period.

Daily Simple SOFR Rate Loans bear interest based on Daily Simple SOFR rates and include a SOFR adjustment of 10 basis points.

The Company has a revolving credit facility with aggregate commitments of $1.5 billion, subject to a borrowing base, and a maturity date of August 21, 2028 (for lenders comprising $1.2 billion of the aggregate commitments) (the “Credit Agreement”), with the remaining aggregate commitments maturing June 4, 2027.

Certain of the Company’s subsidiaries guaranteed the Company’s obligations under the Credit Agreement.

The Credit Agreement includes an accordion feature that allows the aggregate commitments to increase up to $2.0 billion, subject to the borrowing base.

Under the Credit Agreement, the Company has the ability to draw “Term SOFR Rate Loans” or “Daily Simple SOFR Rate Loans.” Term SOFR Rate Loans bear interest based on Term SOFR rates for one or three-month interest periods and include a SOFR adjustment of 10 basis points (“bps”) for each interest period.

Daily Simple SOFR Rate Loans bear interest based on Daily Simple SOFR rates and include a SOFR adjustment of 10 bps.

Interest under Term SOFR Rate Loans and Daily Simple SOFR Rate Loans also include an “applicable rate margin” determined based on the Company’s net debt to capitalization ratio, equivalent to credit spreads of 2.00% to 2.95%.

As of December 31, 2025 and 2024, the outstanding balance under the Credit Agreement was $798 million and $700 million, respectively.

Under the Credit Agreement, the funds available are unsecured and availability under the borrowing base is calculated based on specific advance rates for each of finished lots, construction in process homes, and finished homes inventory on the Consolidated Balance Sheets, and reduced for any outstanding unsecured indebtedness permitted under the Credit Agreement, including the 2028 Notes.

The Company had capitalized debt issuance costs related to construction lines of credit, net of amortization, of $10 million and $7 million as of December 31, 2024 and 2023, respectively, which were included in other assets on the Consolidated Balance Sheets.

Debt issuance costs related to the 2028 Notes and the Credit Agreement that are recorded to capitalized interest are expensed in cost of sales as the homes close.

The Company was in compliance with all debt covenants as of December 31, 2024 and 2023.

The Company expects to remain in compliance with all debt covenants over the next 12 months.

Refer to Note 3, Debt, to the consolidated financial statements for more information on covenants in the Credit Agreement.

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The Company had unamortized debt issuance costs primarily related to the Credit Agreement of $11 million and $10 million as of December 31, 2025 and 2024, respectively.

Unamortized debt issuance costs are included within other assets on the Consolidated Balance Sheets.

Amortization of debt issuance costs related to the Senior Notes and the Credit Agreement are recorded as capitalized interest within inventories on the Consolidated Balance Sheets and are expensed in cost of sales as the related homes close.

Contingent Consideration

Based on the terms of the purchase agreement, at the time of an acquisition, the Company may record a contingent consideration liability based on the expected fair value of any future earn out payments due to the acquiree for a typical period of up to five years post-acquisition.

This liability is remeasured to fair value quarterly and the adjustment is recorded in contingent consideration revaluation in the Consolidated Statements of Comprehensive Income.

As of December 31, 2024, the contingent consideration liability totaled $68 million, with the entire amount expected to be payable within 12 months.

This liability is remeasured to fair value quarterly and the adjustment is recorded in contingent consideration revaluation in the Consolidated Statements of Operations.

On December 15, 2025, the Company made its final earnout payment related to the MHI acquisition of $15.7 million.

As of December 31, 2025, the Company did not have any contingent consideration liabilities and does not expect to have any amounts payable within 12 months for any previous acquisitions.

Further information regarding our contingent consideration liability is provided in Note 1, Nature of Business and Significant Accounting Policies to our consolidated financial statements.

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Following the redemption, no Series B preferred units remain outstanding.

Refer to Note 12, Equity to the consolidated financial statements for disclosure related to the redemption.

Refer to Note 13, Equity to our consolidated financial statements for disclosure related to the redemption.

Redeemable Noncontrolling Interest

Based on the terms of the purchase agreement, at the time of an acquisition, we may issue redeemable noncontrolling interest.

Redeemable noncontrolling interest is reported within m ezzanine equity on the Company’s Consolidated Balance Sheets at the greater of the initial carrying amount (its fair value on the acquisition date) adjusted for the noncontrolling interest’s share of net income (loss) or its redemption value.

After achieving the minimum earnings threshold, the amount of net and comprehensive income that is attributable to the redeemable noncontrolling interest will be presented within net and comprehensive income attributable to noncontrolling interests on the Consolidated Statements of Comprehensive Income.

As of December 31, 2024, the redeemable noncontrolling interest totaled $21 million , of which no amount was redeemable within 12 months.

Refer to Note 1, Nature of Business and Significant Accounting Policies to our consolidated financial statements for more information.

After achieving the minimum earnings threshold, the amount of net income that is attributable to the redeemable noncontrolling interests will be presented within net income attributable to noncontrolling interests on the Consolidated Statements of Operations.

As of December 31, 2025, the redeemable noncontrolling interests totaled $30 million , of which no amount was redeemable within 12 months.

Refer to Note 2, Acquisitions to our consolidated financial statements for more information on redeemable noncontrolling interests related to our acquisitions.

Redeemable Preferred Stock

On September 29, 2021, we sold 150,000 shares of newly-created redeemable preferred stock with an initial liquidation preference of $1,000 per share and a par value $0.01 per share, for an aggregate purchase price of $150 million.

On September 29, 2021, we sold 150,000 shares of redeemable preferred stock with an initial liquidation preference of $1,000 per share and a par value of $0.01 per share, for an aggregate purchase price of $150 million.

We used the proceeds from the sale of the redeemable preferred stock to partially fund the MHI acquisition and for general corporate purposes.

Pursuant to the Certificate of Designations, the redeemable preferred stock ranks senior to the Class A and B common stock with respect to dividends and distributions on liquidation, winding-up and dissolution.

Accordingly, upon a liquidation, dissolution or winding up of the Company, each share of redeemable preferred stock is entitled to receive the initial liquidation preference of $1,000 per share, subject to adjustment, plus all accrued and unpaid dividends thereon.

Refer to Note 12 , Equity to the consolidated financial statements for additional terms of the redeemable preferred stock.

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Accordingly, upon liquidation, dissolution or winding up of the Company, each share of redeemable preferred stock is entitled to receive the initial liquidation preference of $1,000 per share, subject to adjustment, plus all accrued and unpaid dividends thereon.

Refer to Note 13 , Equity to our consolidated financial statements for additional terms of the redeemable preferred stock.

Off-Balance Sheet Arrangements

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Inventories and Homebuilding Cost of Sales

Inventories include the cost of direct land acquisition, land development, construction, capitalized interest, lot option fees, real estate taxes and direct overhead costs incurred related to land acquisition and development and home construction.

Inventories include the cost of direct land acquisition, land development, direct materials, labor, capitalized interest, lot option fees, real estate taxes and direct overhead costs incurred related to land acquisition, land development and home construction.

Indirect overhead costs are charged to selling, general and administrative expense as incurred.

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The carry cost for land and development, recognized in homebuilding cost of sales as homes close, is impacted by our ability to estimate the timing to completion for land development deals and expected sales pace.

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Sold units are expensed on a specific identification basis as homebuilding cost of sales.

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Inventories are carried at the lower of accumulated cost or net realizable value.

We periodically review the performance and outlook of our inventories for indicators of potential impairment.

Business Combinations and Valuation of Contingent Consideration

The Company accounts for business combinations using the acquisition method.

On a quarterly basis, we review the performance and outlook of our communities to identify any indicators of potential impairment.

Such indicators include gross margins or sales paces significantly below expectations, significant delays or changes in the planned development for the community, and other known qualitative factors.

In addition to considering market and economic conditions, we assess current sales absorption levels, recent profitability as well as future plans including cost management initiatives and remaining life cycle of the community.

We look for instances where sales prices for homes in a community or potential sales prices for the future sale of homes within a community would be at a level at which the carrying value of inventory related to that community may not be recoverable.

Business Combinations

The Company accounts for business combinations using the acqu isition method.

Under ASC Topic 805 a business combination occurs when an entity obtains control of a “business.” The Company determines whether or not the gross assets acquired meet the definition of a business.

If they meet this criteria, the Company accounts for the transaction as a stock purchase.

If they do not meet this criteria the transaction is accounted for as an asset purchase.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.

Any goodwill that arises is tested annually for impairment.

If they meet this criteria, the Company accounts for the transaction as a business combination.

If they do not meet this criteria the transaction is accounted for as an asset acquisition.

The consideration transferred in a business combination is generally measured at fair value, as are the identifiable net assets acquired.

Any goodwill that arises in a business combination is tested annually for impairment.

Any gain on a bargain purchase is recognized in profit or loss immediately.

Transaction costs are expensed as incurred, except if related to the issuance of debt or equity securities.

Any contingent consideration is measured at fair value at the date of acquisition and is based on expected cash flows of the acquisition target discounted over time using an observable market discount rate.

The Company generally utilizes outside valuation experts to determine the amount of contingent consideration.

Contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in other income or other expense in the Consolidated Statements of Comprehensive Income.

Recent Accounting Pronouncements

1 unchanged sentence

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-K

Item 7. Management’s Discussion and Analysis