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Our financial services operations support our homebuilding operations by providing mortgage loans and title services to the customers of our homebuilding operations and are reported as an independent segment.
−Removed: Our homebuilding operations comprise the most significant portion of our business, representing 98% of consolidated revenue in both 2023 and 2022.
+Added: Our homebuilding operations comprise the most significant portion of our business, representing 97% and 98% of consolidated revenue in 2024 and 2023, respectively.
We design, market, construct and sell single-family homes and attached townhomes to first-time, move-up, empty-nester, and luxury buyers.
In addition to home sales, our homebuilding operations generate revenue from the sale of land and lots.
−Removed: We use the term “home” to refer to a single-family residence, whether it is a single-family home or attached home.
+Added: We use the term “home” to refer to a single-family residence, whether it is a single-family home or an attached home.
We use the term “community” to refer to a single development in which we construct homes.
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We primarily construct homes in planned development communities and mixed-use communities.
−Removed: We are currently offering homes for sale in 213 communities within 17 markets located in ten states.
+Added: We are currently offering homes for sale in 220 communities and operating within 17 markets located in ten states.
Our average sales price of homes delivered during 2024 was $483,000, and the average sales price of our homes in backlog at December 31, 2024 was $553,000.
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We offer title services through subsidiaries that are 100%-owned by the Company.
−Removed: Our financial services operations accounted for 2% of our consolidated revenues in both 2023 and 2022.
+Added: Our financial services operations accounted for 3% and 2% of our consolidated revenues in 2024 and 2023, respectively.
See the “Financial Services” section below for additional information regarding our financial services operations.
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Industry Overview and Current Market Conditions
−Removed: During 2023, housing market conditions stabilized compared to the more challenging housing market conditions that were present during the second half of 2022 and the first quarter of 2023.
−Removed: Housing demand deteriorated during most of 2022 in connection with significant increases to 30-year fixed mortgage rates resulting from the Federal Reserve's aggressive actions to combat inflation.
−Removed: We believe that this interest rate environment caused many potential homebuyers to stay on the sidelines and delay their home purchases which resulted in lower new contracts and higher cancellations in 2022.
−Removed: The Federal Reserve implemented more modest interest rate changes in 2023 than in 2022 which we believe improved consumer confidence.
−Removed: We continued to offer sales incentives and interest rate buy-downs in select communities in 2023 to further stimulate demand which, in combination with product mix, lowered our average closing price in 2023 compared to 2022.
−Removed: Inventory levels in the housing market remain undersupplied relative to demand due to (1) the underproduction of new homes over the past decade and (2) near record low levels of existing home resale inventory.
−Removed: We believe that the 20% increase in new contracts during 2023 compared to 2022 resulted from the more stable interest rate environment, our sales incentives and interest rate buy-down offerings and the low inventory levels in the housing market.
−Removed: In addition, supply chain conditions also normalized to a large degree with average construction cycle times improving year-over-year.
−Removed: With respect to current market conditions, we believe that the underproduction of new homes over the past decade and the constrained supply of resale inventory will continue to benefit the housing industry over the long term.
−Removed: The current demand for new homes, however, remains subject to uncertainty due to ongoing inflation concerns, consumer confidence, and the current interest rate environment.
−Removed: The potential effect of these factors is uncertain and could adversely impact our operations and financial results in future periods.
−Removed: We believe that we are well positioned to manage through the ever-evolving housing industry market conditions with our affordable product offerings, land position and planned new community openings.
−Removed: We remain sensitive to potential changes in market conditions, and continue to focus on controlling overhead leverage, carefully managing our investment in land and land development spending, and selectively offering incentives.
+Added: During 2024, housing market conditions remained relatively healthy despite elevated inflation and mortgage interest rates.
+Added: In the second half of 2024, the Federal Reserve reduced interest rates three times for a total of 100 basis points.
+Added: Despite the rate cuts by the Federal Reserve, mortgage rates continued to hover around 7% throughout 2024.
+Added: The demographics supporting housing demand continued to be somewhat favorable as a result of a limited supply of both new and existing homes compared to the rate of household formations.
+Added: Inventory levels in the housing market remain undersupplied due to the underproduction of new homes over the past decade and low levels of existing home resale inventory.
+Added: On the other hand, affordability is under increasing pressure due to rising home costs.
+Added: We offered sales incentives and mortgage interest rate buydowns in 2024 to further stimulate traffic and demand.
+Added: We believe that the 8% increase in new contracts during 2024 compared to 2023 resulted from our sales incentives and interest rate buydown offerings and the low inventory levels in the housing market.
+Added: In addition, supply chain and labor conditions remained stable throughout 2024 which allowed us to improve construction cycle times compared to 2023.
+Added: With respect to current market conditions, although the level of new and existing home inventories has increased from historically low levels, the supply of homes at affordable price points is generally still limited.
+Added: In addition, demographics supporting housing demand remain favorable and we believe that they will continue to benefit the housing industry over the long-term.
+Added: Our use of sales incentives and mortgage interest rate buydowns in 2025 will depend on, among other things, market dynamics, including mortgage interest rates and overall housing affordability, as well as community-specific considerations, including the size and construction stage of the backlog, sales pace and lots remaining available for sale.
+Added: We do expect some margin compression in 2025 when compared to 2024 levels as a result of the current market conditions.
+Added: We also expect to increase our land acquisition and development investment activity in 2025 compared to 2024 to support future growth, subject to market conditions and available opportunities that meet our investment return standards.
+Added: We will continue to prioritize managing our land spend and inventory levels of finished lots and inventory homes by balancing our development investment activity and our construction pace.
+Added: The current demand for new homes remains subject to uncertainty due to ongoing affordability and inflation concerns, consumer confidence, labor and material costs and availability, and the current interest rate environment.
+Added: The potential effects of these factors are uncertain and could adversely impact our operations and financial results in future periods.
+Added: We believe that we are well positioned to manage through the evolving housing industry market conditions by focusing on our land position, new community openings, and affordable product offerings.
+Added: We remain sensitive to potential changes in market conditions, and continue to focus on controlling overhead leverage, carefully managing our investment in land and land development spending, and judiciously offering homebuyer incentives.
Our strong balance sheet and liquidity position should also provide us with flexibility through changing economic conditions.
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Business Strategy
−Removed: We are focused on maximizing profitability, continuing to expand our market share using our more affordable designs and being selective in land and land development investment opportunities.
+Added: We are focused on maximizing profitability, continuing to expand our market share through our more affordable and move-up product designs and being selective in land and land development investment opportunities.
Consistent with our focus on improving long-term financial results, we expect to continue to emphasize the following strategic business objectives in 2025:
+Added: • promote sales where necessary through interest rate buydowns and/or other incentives;
• managing our land spend and inventory levels;
−Removed: • improving our construction cycle times;
+Added: • managing our construction cycle times;
• opening new communities;
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Sales and Marketing
−Removed: In 2023, we continued to focus our marketing efforts on first-time and move-up homebuyers, including home designs targeted to first-time, millennial, multi-generational and empty-nester homebuyers.
+Added: We focus our marketing efforts on first-time and move-up homebuyers, including home designs targeted to first-time, multi-generational and empty-nester homebuyers.
We market and sell our homes under the M/I Homes brand.
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(4) fully furnished model homes and highly-trained sales consultants to build the buyer’s confidence and enhance the quality of the homebuying experience;
−Removed: (5) our mortgage financing programs that we offer through M/I Financial, including competitive fixed-rate and adjustable-rate loans and, in certain cases, interest rate buy-down incentives;
+Added: (5) our mortgage financing programs that we offer through M/I Financial, including competitive fixed-rate and adjustable-rate loans and, in certain cases, interest rate buydown incentives;
(6) our Ready Now Homes program which offers homebuyers the opportunity to close on certain new homes in 90 days or less;
and (7) our unwavering focus on customer care and customer satisfaction.
−Removed: By offering Whole Home Energy-Efficient Homes to our customers, we enable our homebuyers to save on their energy costs (the second largest cost of home ownership) compared to a home that is built to minimum code requirements, while also contributing to the reduction of greenhouse gas emissions and potential climate change impacts.
+Added: By offering energy-efficient homes to our customers, we enable our homebuyers to save on their energy costs (the second largest cost of home ownership) compared to a home that is built to minimum code requirements, while also contributing to the reduction of greenhouse gas emissions and potential climate change impacts.
We use independent RESNET-Certified Raters and the HERS (Home Energy Rating System) Index, the national standard for energy efficiency, to measure the performance of our homes, including insulation, ventilation, air tightness, and the heating and cooling system.
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Our Design Studios allow our homebuyers to select from a variety of product and design options that are available for purchase as part of the original construction of their homes.
−Removed: Our centers are staffed with Design Consultants who help our homebuyers select the right
−Removed: combination of options to meet their budget, lifestyle and design sensibilities.
+Added: Our centers are staffed with Design Consultants who help our homebuyers select the right combination of options to meet their budget, lifestyle and design sensibilities.
In most of our markets, we offer our homebuyers the option to consider and make design planning decisions using our Online Design Center.
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We seek to keep our homebuyers actively involved in the construction of their new home by communicating with them throughout the design and construction process.
−Removed: We achieve this with “MyMIHome”, a digital experience, that delivers notification of key milestones, photos of the construction progress, checklists for customers to complete, easy access to purchase contracts and other related documents, and more.
−Removed: Our goal is to put the buyer first and enhance the total homebuying experience.
+Added: We achieve this with our “Journey” app, a digital experience, that delivers notification of key milestones, photos of the construction progress, checklists for customers to complete, easy access to purchase contracts and other related documents, and more.
+Added: Our goal is to enhance the total homebuying experience.
We believe prompt and courteous responses to homebuyers’ needs throughout the homebuying process reduce post-delivery repair costs, enhance our reputation for quality and service, and encourage repeat and referral business from homebuyers and the real estate community.
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The particular media used differs from market to market based on area demographics and other competitive factors.
−Removed: We market directly to consumers via newspaper, direct mail, billboards, radio, and television as well as internet marketing using our website, search engine optimization, paid search, and display advertising.
−Removed: We leverage our presence on referral sites, such as Zillow.com, Realtor.com, and NewHomeSource.com, to drive sales leads to our internet sales managers.
−Removed: We also use email marketing to maintain communication with existing prospects and customers.
+Added: We market directly to consumers via website, search engine optimization, paid search, and display advertising as well as traditional marketing efforts such as newspaper, direct mail, billboards, radio, and television.
+Added: We leverage our presence on referral sites, such as Zillow.com, Livable.com, Realtor.com, and NewHomeSource.com, to drive sales leads to our internet sales managers.
+Added: We use email marketing to maintain communication with existing prospects and customers.
We use our social media presence to communicate to potential homebuyers the experiences of customers who have purchased our homes and to provide content about our homes and design features.
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Our communities are designed as neighborhoods that fit existing land characteristics.
−Removed: We strive to achieve diversity among architectural styles within a community by offering a variety of house models and several exterior design
−Removed: options for each model.
+Added: We strive to achieve diversity among architectural styles within a community by offering a variety of house models and several exterior design options for each model.
We believe our communities have attractive entrances with distinctive signage and landscaping and that our attention to community detail avoids a “development” appearance and gives each community a diversified neighborhood appearance.
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In addition to single-family detached homes, we also offer attached townhomes in several of our markets.
−Removed: We believe that offering a wide range of homes enables us to attract first-time, millennial, multi-generational, move-up, empty-nester and luxury homebuyers.
+Added: We believe that offering a wide range of homes enables us to attract first-time, multi-generational, move-up, empty-nester and luxury homebuyers.
We devote significant resources to the research, design and development of our homes to meet the demands of our buyers and evolving market requirements.
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Across all of our divisions, we currently offer over 500 different floor plans designed to reflect current lifestyles and design trends.
−Removed: Work-from-home needs for potential homebuyers continue to be an important planning tool for us, and we will continue to design and offer in-home spaces that are bright, functional and bring value to our buyers.
+Added: Work-from-home needs for potential homebuyers remain an important planning tool for us, and we will continue to design and offer in-home spaces that are bright, functional and bring value to our buyers.
We also continue to develop new floor plans and communities specifically for the growing empty-nester market.
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In some cases where commercial and office developments are in less demand, we see potential to rezone to a higher density multi-family solution.
−Removed: As affordability remains a key driver of sales, our “Smart Series” has become more important than ever and represented approximately 55% of our total sales for the year ended December 31, 2023.
+Added: As affordability remains a key driver of sales, our “Smart Series” has remained important and represented approximately 52% of our total sales for the year ended December 31, 2024.
Our “Smart Series” is market specific and intended to offer buyers excellent value, desirable locations, and pre-selected packages of upgraded finishes and appliances.
−Removed: The “Smart Series” targets entry-level and move-down buyers and focuses significant attention on affordability, livability and design flexibility.
+Added: The “Smart Series” targets
+Added: entry-level and move-down buyers and focuses significant attention on affordability, livability and design flexibility.
We continue to increase our multi-family Smart Series offerings in several of our divisions.
These Smart Series townhome programs are thoughtfully designed and intended to be more affordable and take advantage of higher density opportunities either as stand-alone communities or as part of our conventional Smart Series single-family neighborhoods.
−Removed: Our “City Collection” floor plans offer a unique and upscale urban lifestyle by utilizing narrow lots, detached rear garages and thoughtfully designed interiors.
−Removed: Our City Collection enables us to participate in new infill development opportunities that extend beyond our traditional suburban markets.
We design all of our product lines to reduce production costs and construction cycle times while adhering to our quality standards and using materials and construction techniques that reflect our commitment to more environmentally conscious homebuilding methods.
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Our raw materials consist primarily of lumber, concrete and similar construction materials, and while these materials are generally available from a variety of sources, we have reduced construction and administrative costs by executing national purchasing contracts with select vendors.
−Removed: We experienced more normalized labor and supply markets in 2023 which improved our construction cycle times.
Our homes are constructed according to standardized prototypes which are designed and engineered to provide innovative product design while attempting to minimize costs of construction and control product consistency and availability.
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We generally employ subcontractors to install site improvements and construct homes.
−Removed: The construction of each home is supervised by a Personal Construction Supervisor who reports to a Production Manager, both of whom are employees of the Company.
−Removed: Our Personal Construction Supervisors manage the scheduling and construction process.
+Added: The construction of each home is supervised by a personal Construction Manager who reports to an Area Production Manager, both of whom are employees of the Company.
+Added: Our personal Construction Managers manage the scheduling and construction process.
Our subcontractors perform pursuant to written agreements that require them to comply with all applicable laws and labor practices, follow local building codes and permits, and meet performance, warranty, and insurance requirements.
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The construction of our homes typically takes approximately four to six months from the start of construction to completion of the home, depending on the size and complexity of the particular home being built, weather conditions, and the availability of labor, materials, and supplies.
−Removed: We remain focused on improving construction cycle times in all of our markets.
−Removed: In 2023, we reduced our average days under construction by more than 60 days.
−Removed: Continued improvement in supply chain and labor market conditions would enhance our ability to reduce production times.
+Added: We remain focused on improvements in supply chain and labor market conditions that could impact our ability to maintain production times.
We construct inventory homes to facilitate delivery of homes on an immediate-need basis under our Ready Now Homes program and to provide presentation of new products.
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Most of our home purchase contracts stipulate that if a homebuyer cancels a contract with us, we have the right to retain the homebuyer’s deposits.
−Removed: However, we generally permit our homebuyers to cancel their obligations and obtain refunds of all or a portion of their deposits (unless home construction has started) in the event mortgage financing cannot be obtained within the period specified in their contract to maintain goodwill with the potential buyer.
+Added: However, we generally permit our homebuyers to cancel their obligations and obtain refunds of all or a portion of their deposits in the event mortgage financing cannot be obtained within the period specified in their contract.
Backlog consists of homes that are under contract but have not yet been delivered.
Ending backlog represents the number of homes in backlog from the previous period plus the number of net new contracts (new contracts for homes less cancellations) generated during the current period minus the number of homes delivered during the current period.
−Removed: The backlog at any given time will be affected by cancellations.
+Added: The backlog at any given
+Added: time will be affected by cancellations.
Due to the seasonality of the homebuilding industry, the number of homes delivered has historically increased from the first to the fourth quarter in any year.
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Homes included in year-end backlog are typically included in homes delivered in the subsequent year.
+Added: The decrease in backlog compared to prior year is due to more inventory homes being sold in the fourth quarter of 2024 due to the sales incentives, such as mortgage rate buydowns we offered.
We provide certain warranties in connection with our homes and also perform inspections with the buyer of each home immediately prior to delivery and as needed after a home is delivered.
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The Home Builder’s Limited Warranty covers construction defects for a statutory period based on geographic market and state law (currently ranging from four to ten years for the states in which the Company operates) and includes a mandatory arbitration clause.
−Removed: The structural warranty is for 10 years for homes sold after December 31, 2021, 10 or 15 years for homes sold after December 1, 2015 and on or before December 31, 2021 (except for homes sold in Texas), and 10 or 30 years for homes sold after April 25, 1998 and on or before December 1, 2015 (except for homes solid in Texas).
+Added: The structural warranty is for 10 years for homes sold after December 31, 2021, 10 or 15 years for homes sold after December 1, 2015 and on or before December 31, 2021 (except for homes sold in Texas), and 10 or 30 years for homes sold after April 25, 1998 and on or before December 1, 2015 (except for homes sold in Texas).
We also pass along to our homebuyers all warranties provided by the manufacturers or suppliers of components installed in each home.
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In order to minimize our investment and risk of large exposure in a single location, we have periodically partnered with other land developers or homebuilders to share in the cost of land investment and development through joint ownership and development agreements, joint ventures, and other similar arrangements.
−Removed: For joint venture arrangements where a special purpose entity is established to own the property, we enter into limited liability company or similar arrangements (“LLCs”) with the other partners.
+Added: For joint venture arrangements where a special purpose entity is established to
+Added: own the property, we enter into limited liability company or similar arrangements (“LLCs”) with the other partners.
Further details relating to our joint venture arrangements are included in Note 6 to our Consolidated Financial Statements.
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For instance, the SEC has proposed extensive climate-related disclosure rules, which, if adopted, would likely impose significant compliance costs on us.
−Removed: Environmental costs and accruals were not material to our operations, cash flows or financial position in 2023, 2022 or 2021, although we did experience a reduction in our energy efficient home credits in 2023 when compared to prior years as the Inflation Reduction Act (“IRA”) that was enacted August 16, 2022 made the requirements for obtaining the tax credit more difficult to obtain.
+Added: Environmental costs and accruals were not material to our operations, cash flows or financial position in 2024, 2023 or 2022.
Our homebuilding operations are also subject to various local, state and federal statutes, ordinances, rules and regulations concerning building, zoning, design, construction, sales, consumer protection and similar matters.
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We pay our employees competitively and offer a comprehensive set of benefits to full-time employees, including a 401(k) Profit Sharing Plan to help employees plan for retirement, which we believe are competitive with others in our industry.
−Removed: More information regarding our human capital programs and initiatives can be found in the “Employee Engagement and Safety” section of our Environmental, Social and Governance Report.
+Added: More information regarding our human capital programs and initiatives can be found in the “Our Employee Focus,” “Diversity, Equity, and Inclusion” and “Safety and Training” sections of our Environmental, Social and Governance Report.
A copy of our Environmental, Social and Governance Report is available on our website at www.mihomes.com under the “Investors” heading.
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and (4) building energy efficient homes.
−Removed: In 2023, we also published our fourth annual Environmental, Social and Governance Report which provides detailed information regarding our ESG policies, initiatives and strategies and includes certain quantifiable performance indicators for 2022.
+Added: In 2024, we also published our annual Environmental, Social and Governance Report which provides detailed information regarding our ESG policies, initiatives and strategies and includes certain quantifiable performance indicators for 2023.
These performance indicators were largely based on the Sustainability Accounting Standards Board industry-specific standards.
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We make available, free of charge, on or through our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
−Removed: Our website also includes printable versions of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the charters for each of our Audit, Compensation, and Nominating and Corporate Governance Committees.
+Added: Our website also includes printable versions of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics, and the charters for each of our Audit, Compensation, and Nominating and Governance Committees.
The contents of our website are not incorporated by reference in, or otherwise made a part of, this Annual Report on Form 10-K.
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.