In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item IA "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect our business, financial condition or future results.
−Removed: The risks described below and in our Annual Report on Form 10-K are not the only risks facing us.
+Added: The risks described in our Annual Report on Form 10-K are not the only risks facing us.
Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may eventually prove to materially adversely affect our business, financial condition and/or operating results.
Except as described below, there has been no material change in our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
−Removed: Supply shortages and other risks related to the demand for building materials could materially disrupt our operations and increase costs.
−Removed: We depend on continued availability of building materials in order to timely construct our homes.
−Removed: The availability of these materials can be significantly impacted by a variety of factors outside of our control.
−Removed: Constraints of raw materials and finished goods or in the distribution channels of our construction inputs can delay delivery of our homes to customers and can increase our building costs or lead to sales orders cancellations.
−Removed: For example, in 2021, supply chain constraints for various construction materials related to sustained demand amid the backdrop of a global pandemic have delayed our construction cycle times.
−Removed: These delays impact the timing of our expected home closings and may also result in cost increases that we may not be able to pass to our current or future customers.
−Removed: Sustained increases in construction costs may, over time, erode our margins.
+Added: Increases in interest rates or decreases in mortgage availability may make purchasing a home more difficult or less desirable and may negatively impact the ability to sell new and existing homes.
+Added: In general, housing demand is adversely affected by increases in interest rates and a lack of availability of mortgage financing.
+Added: Most of our buyers finance their home purchases through our mortgage joint venture or third-party lenders providing mortgage financing.
+Added: If mortgage interest rates increase and, consequently, the ability of prospective buyers to finance home purchases is adversely affected, our home sales and cash flow may be adversely affected and the impact may be material.
+Added: Additionally, rapid increases in interest rates may negatively impact affordability of a home purchase for existing buyers in backlog who have not yet locked in a mortgage interest rate for their loan.
+Added: This could lead to an increase in the number of contract cancellations in our reported sales order numbers.
+Added: For example, although long-term interest rates remain low compared to historical averages, in the first three months of 2022 they have trended upward and are anticipated to continue to increase for the foreseeable future.
+Added: A homebuyers' ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the FHA, the VA, Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac").
+Added: If credit standards or appraisal guidelines are tightened, or mortgage loan programs are curtailed, potential buyers of our homes may not be able to obtain necessary mortgage financing.
+Added: There can be no assurance that these programs will continue to be available or that they will be as accommodating as they currently are.
+Added: Continued legislative and regulatory actions and more stringent underwriting standards could have a material adverse effect on our business if certain buyers are unable to obtain mortgage financing.
+Added: A prolonged tightening of the financial markets could also negatively impact our business.
+Added: The above risks can also indirectly impact us to the extent our customers need to sell their existing homes to purchase a new home from us if the potential buyer of their home is unable to obtain mortgage financing.
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